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Invensys to buy Baan
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May 31, 2000: 9:41 a.m. ET
UK engineer to scoop up ailing Dutch software firm for $709 million
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LONDON (CNNfn) - Engineer Invensys announced plans Wednesday to end the misery of suffering software house Baan, saying it would pay  762 million ($709 million) to take over the Dutch firm.
Invensys's offer of 2.85 in cash for each Baan share won the unanimous recommendation of the software maker's directors. The price was 9 percent above the closing level of Baan shares in Amsterdam Tuesday.
However, the Dutch company's stock jumped 14 percent to 2.99 in afternoon trading Wednesday. The gain implied investors expect another buyer to make an approach for the software expert, although the companies said Baan would have to pay Invensys a break-up fee of 22.8 million if it talks to another bidder.
Another bidder?
"Some people obviously believe there's another bid out there," Lehman Brothers analyst Brian Skiba told CNNfn.com, although Skiba felt such a prospect was unlikely.
A catalog of disasters has befallen once-profitable Baan, including seven straight loss-making quarters, accounting problems and the departure of a series of top executives, decimating the company's share price, which peaked at around 48 in early 1997. Earlier this year the company was threatened ejection from the Amsterdam market's main index as its financial resources deteriorated beyond levels called for by the exchange. Nevertheless, the firm remains Europe's second-biggest provider of business software.
Recognizing the problems, Invensys (ISYS) announced a major restructuring program at the Dutch firm, which will lead to the 1,000 job cuts and a one-time expenditure of $400 million over the next 18 months. Invensys said it expects to generate $250 million in savings over the next six to nine months.
Lehman's Skiba pointed out that Invensys "intends to keep the company virtually intact," and he said this would encourage corporate customers to continue buying the firm's software.
Invensys intends to fold Baan into a new division, Invensys Software and Systems, coordinating all the enlarged firm's activities in what it terms "manufacturing solutions".
"Baan is an excellent fit with Invensys's existing software and systems business," Invensys Chief Executive Allen Yurko said in a statement.
 Invensys was the name adopted by the company formed when British engineering firm Siebe bought rival BTR in early 1999. The company has branched out, broadening the range of the technological solutions it offers to business.
The U.K. company's stock slumped 10 percent to 239 pence, cutting its market value to £8.4 billion ($12.4 billion), as investors questioned the wisdom of the deal.
Invensys on Wednesday said operating profit before one-time items rose 9 percent to £1.08 billion ($1.6 billion) in the year ended Mar. 31, alongside a 4 percent rise in revenue to £6.97 billion. 
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