June 3, 2003 10:48 AM PDT

Invensys sells Baan for $135 million

Invensys on Tuesday said it has sold Baan, the financially troubled software maker, for $135 million to a group of investors.

The investment group, consisting of Cerberus Capital Management and General Atlantic Partners, said it plans to combine Baan over the next few months with SSA Global Technologies, an enterprise software company focusing on the manufacturing industry that the two buyers already own.

Invensys announced its decision to sell Baan in April as part of its strategy to spur growth and reduce debt. The company acquired Baan for $708 million in 2000.

Baan's software is designed to automate corporate accounting, sales, manufacturing and human resources operations. The company competes with SAP, PeopleSoft, Oracle and other companies in the market for business-management applications. More than 6,500 companies use Baan's software to run their businesses, the company says. They include Volvo, Solectron, Boeing and British Aerospace, according to Baan's Web site.

Baan executives say that, although the combined Baan and SSA will have much overlap, the two companies' complementary strengths will serve them well as the enterprise resource planning (ERP) market consolidates over the next few years.

That consolidation has already begun, according to some analysts. On Monday, Peoplesoft acquired manufacturing software specialist J.D. Edwards in a deal worth $1.7 billion, creating a business software powerhouse with more than 11,000 customers.

Baan executives said the marriage with SSA will create a single, stronger company that's focused on manufacturing software sales. "The two companies...are very focused on the manufacturing industry--at the same time, they are very complementary," said Laurens van der Tang, Baan's president, in a conference call. Combined, the companies "will be able to make each other much stronger in the market."

Van der Tang noted that SSA's core strength is in the North America manufacturing industry, while Baan's strength lies in European manufacturing. He added that, as customers outgrow SSA's software, they can move to Baan's next-generation ERP software, code-named Gemini, which he says will reach the market later this year.

The investment group said that the combined companies will have nearly $600 million in combined revenue and more than 16,000 customers in manufacturing.

Just how integrated the companies will become remains unclear. Van der Tang said that Baan will operate globally as the Baan division of the combined entity, with dedicated sales, marketing, development, consulting and support. The two companies will, however, share office space and human resources.

General Atlantic Partners, which manages more than $5 billion in investments, is a former Baan investor. Cerberus manages about $9 billion in investments.

 

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