Microsoft said it will buy long-time business partner and business software developer Great Plains Software in a $1.1 billion stock-swap deal.
The software giant said the acquisition will help it move into the accounting space and also build momentum for its .Net initiative.
Great Plains provides software for financials, distribution, enterprise reporting, project accounts, electronic commerce, human resources and payroll, manufacturing, and customer service. Earlier this week, the company reported a $4.2 million profit on revenue of $75.5 million for its second fiscal quarter ended November 30.
Each share of Great Plains' common stock will be exchanged for 1.1 shares of Microsoft common stock.
Microsoft group vice president Jeff Raikes and senior vice president of business applications David Vaskevitch will jointly lead the new Microsoft Great Plains division. Great Plains will continue to develop, market and support its current line of business management software.
Raikes said: The combination of our two companies will accelerate small and medium business efficiency and agility by offering software solutions for automating interconnected business processes."
Further down the line, the division will provide new capabilities that complement Microsoft's online service for small companies, bCentral. Additionally, the two companies plan to create an interconnected set of business applications that will be built on top of Microsoft's .Net platform.
Bankers Merrill Lynch said the move marked a change in Microsft's approach to its partners. "This does change, quite dramatically, Microsoft's hands-off approach to its application development partners," a reserach note said.
Merril Lynch said it regarded the acquistion as an attempt by Microsft to "accelerate its revenue mix shift towards higher-growth enterprise software and way from stagnating desktop revenue. "
The announcement comes just a week after Microsoft warned that its financial results would likely be below expectations in the current quarter.
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