Invensys announced yesterday that it's continuing with a planned acquisition of financially strapped Baan, despite once again not getting the amount of Baan shares that it had set as a condition for going through with the $US709 million deal.
London-based Invensys said it bought or received sale commitments for about 75% of Baan's shares under an extended tender offer that expired yesterday.
That still fell far short of the 95% level that Invensys was looking for, but the company said it has waived that requirement and signed a deal with Baan to take full control of the Netherlands-based business applications vendor.
The latest development follows announcements last week by Baan in which the company restated its 1999 financial results and warned that it would report an eighth straight quarterly when its second-quarter results are released -- a pair of blows that Baan executives said raised "significant uncertainty" about the company's ability to continue operating without a takeover by Invensys.
Invensys CEO Allen Yurko said in a statement yesterday that the worsening situation at Baan "required decisive and immediate action".
Invensys officials considered terminating the acquisition offer but decided that Baan could still be a viable entity "once we have completed the comprehensive restructuring it requires," Yurko added.
David Dobrin, an analyst at Benchmarking Partners said Baan's chief problem has been its precarious and uncertain financial position.
The acquisition by Invensys "solves the financial problems in one stroke," he said. But he added that it leaves Invensys with the tough job of bringing Baan into its fold.
"The essential problem for Invensys is the closed, insular structure of Baan itself," Dobrin said. "One of Baan's greatest strengths is this cohesiveness. (Dealing with) that will be Invensys' biggest challenge."
Craig Mey, vice president of manufacturing services at Phillips Plastics, a Baan user, said he's relieved that Invensys changed its offer terms to keep the Baan buyout alive.
"That's very good news," Mey said. "We need Baan to be a solid and stable entity."
Phillips has been using Baan's enterprise resource planning (ERP) software since last spring, after a three-year implementation project.
After that investment of time and money, Mey said, the company isn't in any mood to shop for another ERP vendor and start over with new applications.
"We do not want to go through another implementation," he said.
In a statement, Pierre Everaert, Baan's interim CEO, said company officials remain convinced that the acquisition by Invensys "is the only sure way to save Baan."
Everaert added that yesterday's announcement by Invensys "provides our employees with a stable work environment and our customers with the reassurance they need and the continuity they want."
Invensys, an automation and industrial controls vendor that has also bought several other software companies in recent years, said its tender offer for Baan's shares is again being extended, this time to August 1.
The British company added that it will go through with the deal as long as it controls more than 50% of Baan's shares at that point.
Plans call for Baan to be folded into a new software and systems division that Invensys is setting up. The acquisition will work "only if we can fully integrate (Baan's) operations into the new division," Yurko said.