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AUSTIN, Texas - Redmond, Washington-based Microsoft has made a $1.2 billion offer to acquire Oslo-based enterprise data search company Fast Search and Transfer, the companies announced Tuesday in a joint news release. Microsoft's offer of $2.97 per share, or 19.00 Norwegian kroner, a 42  percent premium to the closing share price on January 4, which values Fast Search's equity at 6.6 billion kroner or approximately $1.2 billion U.S., aims to give the world's largest software maker a boost in business search engine software for large corporations, a surprisingly weak area for Microsoft according to many analysts. The offer increased the stock's value on the Oslo Stock Exchange by over 40 percent in early trading Tuesday. "This acquisition gives Fast an exciting way to spread our cutting-edge search technologies and innovations to more and more organizations across the world," said Fast's chief executive John Lervik in the joint statement. "By joining Microsoft, we can benefit from the momentum behind the SharePoint business productivity platform to really empower a broader set of users through Microsoft’s strong sales and marketing network. It validates Fast’s momentum and leadership in enterprise search,” added Lervik. Microsoft to Tap Fast's Talent Pool Noting Fast's deep talent pool and expertise in "best-in-class, high-end search solutions," Microsoft hopes the acquisition will help bolster its enterprise search and filtering efforts and expand on such small business services as Microsoft Office SharePoint Server, the joint statement said. In offering to acquire the Norwegian firm, Microsoft also hopes to expand its research and development presence in Europe beyond the research teams it already has in Copenhagen, Denmark and Cambridge, England. Fast brings a number of products and services to its customers, including the following:  | OEM Search Integration | | | Risk Management | | | eCommerce | | | Corporate Operations | | | Surveillance and Enforcement | | | Market Management | | | Mobile | | | Online Media | | | Information Management | Jeff Raikes, president of the Microsoft Business Division expressed excitement over Tuesday's announcement. "Enterprise search is becoming an indispensable tool to businesses of all sizes, helping people find, use and share critical business information quickly," Raikes said. "Until now organizations have been forced to choose between powerful, high-end search technologies or more mainstream, infrastructure solutions. The combination of Microsoft and Fast gives customers a new choice: a single vendor with solutions that span the full range of customer needs,” added Raikes. Fast Search Background Fast, founded in 1997 in Oslo and publicly traded on the Oslo Stock Exchange,  provides real-time, flexible and scalable search engine products for managing and storing information, and operates globally with offices in Europe, the United States, Australia, Asia and the Middle East. The Norwegian data-search company, one of the leading developers of business-intelligence products, provides services allowing major corporations to maintain and analyze large internal database systems. In 2006 Fast totaled $162.6 million in revenue, a profit of $3.4 million, and in 2007 it began a program branching out into online advertising and search, entering into a deal with Japan's largest online retailer, Rakuten Inc. Most recently Fast reported a net loss of just over $100 million on revenue of $35.6 million during the third quarter, a decline of $42.5 million in sales from the same quarter in 2006. Teleconference Held Tuesday morning both companies held a teleconference about the acquisition offer. News of Microsoft's offer caused shares of Fast's rival, Cambridge, England-based Autonomy, to rise as speculation increased that Tuesday's offer may be the first of several for similar search engine firms who may catch the eye of such companies as Oracle, Germany's SAP AG, Adobe, or IBM. Autonomy recently purchased Zantaz and Meridio. Fast's rivals also include privately-held Endeca of Cambridge, Massachusetts, and Exalead of France. Shrewsbury, Massachusetts-based research firm Gartner estimates the global market for the type of software Fast, Autonomy and Endeca sell will reach $913 by 2009, a 12 percent increase over the $815 the firm predicts for 2008, according to a recent article in the International Herald Tribune. $1.2 Billion Offer Details The board of directors at Fast has unanimously recommended that its shareholders accept Microsoft's offer, and shareholders with a combined 37 percent of the outstanding shares, including the two largest corporate shareholders, conglomerate Orkla ASA and Hermes Focus Asset Management Europe, have decided irrevocably to accept the offer, the statement from the two companies said. The transaction is expected to be completed in the second quarter of 2008, once all customary terms and conditions have been met, the statement said. Before the offer is complete acceptance from shareholders representing more than 90 percent of Fast's shares and all regulatory approvals must take place, and although no further details of the offer were available Tuesday, Microsoft said that it will provide them, along with all terms and conditions of the acquisition, in a document that will be sent to Fast shareholders during the week of January 14, 2008. Gartner analyst Whit Andrews told the Tribune Tuesday's offer will send a clear message to large corporations that Microsoft is ready to compete in the high-end enterprise search market. "What this purchase will do is allow Microsoft to go to the largest companies in the world and say, 'We can handle every search need you ever dreamed of,' " said Andrews. "I would not be surprised also if Microsoft did not incorporate Fast's search technology into some of its broader consumer search programs," he added. Troubled History at Fast Search and Transfer Fast has seen its share of hard times during the past several years, including controversy surrounding accounting methods that led to heated public disagreements in Oslo and the resignation of three board members at the end of 2007, prompting an announcement in December, 2007 that it was undertaking a review of its financial returns from 2006 and 2007, and acknowledging flaws in its accounting procedures. Following that announcement the company's share price fell seven percent on the Oslo Stock Exchange, and since the company has announced a reorganization outline to reduce costs, slim down its payroll and concentrate on markets showing higher growth rates to revive earnings. Fast Clients Include Fortune 500 Fast has a long and notable client list of over 3,500 companies, including such large global corporations and entities as: | | America Online | | | Reuters | | | Dell, Inc. | | | United States Army | | | Fidelity Investments | | | Disney | | | Pfizer | | | LexisNexis | | | UBS | | | Comcast Corporation | | | United Parcel Service | | | Deutsche Telekom AG | | | IBM | Fast Products Could Augment Microsoft's Fast's enterprise-level applications, which can cost over $350,000, help large global corporations search for information on both the Internet and within secure company intranets, services which could complement Microsoft's small business and consumer-oriented search products such as MSN Live Search, SharePoint Server, and Microsoft Search Server. At the International Consumer Electronics Show in Las Vegas this week, Microsoft chairman Bill Gates spoke of his company's desire to offer businesses high-end software. "The tendency not to focus much on business computing is a little too bad because business computing - making jobs more fun, making people more effective - really has a big impact on the economy," Gates told Reuters in an interview at CES. "[...] In areas like search, we have to show that we can do as good and better than Google can do," added Gates. Although acquiring Fast may help Microsoft expand its search business in the enterprise market, it may do little to help combat consumer search leaders Google and Yahoo. On the consumer search front, Microsoft has been building new data centers worldwide in an effort to better compete with Google and Yahoo. Sales of Microsoft's Office SharePoint Server totaled over $800 million during the first half of 2007, according to figures the company released in July. In November 2007 Microsoft began giving away a free edition of its Search Server Express 2008 software. Microsoft Offers $1.2 Billion for Norwegian Firm Fast Search Some analysts see Tuesday's offer as the first of a potential series of similar deals. "This is going to be the beginning of a wave of consolidation in this industry," Mike Davis of research firm Ovum told the Tribune. "By buying Fast, Microsoft gets instant credibility in business intelligence software aimed at professional users. Other companies will likely follow suit," said David. Kaupthing Bank Analyst Erik Hjulstroem is advising investors to accept Microsoft's bid. "We advise investors to accept the bid, given the poor outlook the company has on a stand-alone basis," Hjulstroem told MarketWatch in a recent article. The acquisition also appears to be a good match to Oslo-based Fondsfinans AS analyst Arild Nysaether. "Microsoft is investing in enterprise software, and Web search is a central and important part of the area," Nysaether told Bloomberg in a recent article. "This is a component that they lack, so it's a natural fit for Microsoft," Nysaether added. Reaction to the $1.2 billion takeover offer has been mostly positive among members of the popular online discussion forums operated by WebmasterWorld, a community of mostly technically savvy webmasters and search engine marketing (SEM) professionals founded by chief executive Brett Tabke. A forum member using the handle "np2003" sees the offer as good for Fast Search, a company with a good reputation among some in the SEM industry. "I think this is great. Fast is a good engine, its fast and indexes a lot. I use them for backlink research and I've found them much more comprehensive than all the other engines," the poster wrote. "Let's hope things get shaken up a bit," they added. Trygve Lauvdal, an analyst for DnB NOR Markets, told the Wall Street Journal in a recent article that Microsoft's offer came at a good time, with Fast Search's share price relatively low, and noted that he expects the deal to go through. Microsoft stock was down 0.6 percent to $34.43 per share shortly after the announcement was made Tuesday. Related Links:
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10:41 pm on Jan. 8, 2008 (utc 0)