Microsoft To Acquire Great Plains For $1.1 Billion

Like Oracle, Microsoft sees the value of wedding financial applications with its back-end database and services.

Microsoft has reached an agreement to buy Great Plains Software, a major vendor of financial and accounting applications for small and midsize businesses.

According to a joint statement issued by the two companies on Thursday morning, the union will "meet the needs of small and medium-sized companies in the interconnected economy."

Today, Microsoft's group vice president of the Productivity and Business Services Group, Jeff Raikes, and Doug Burgum, Great Plains chairman and CEO, will detail the acquisition.

"Microsoft's acquisition of Great Plains will accelerate the success of small and [midsized] companies globally with integrated, extensible business management software solutions needed to succeed in an increasingly interconnected economy," said company executives in a statement issued this morning. "The acquisition will also create new opportunities for Microsoft and Great Plains partners to grow their businesses by delivering and integrating next-generation solutions that take advantage of the powerful .Net foundation of small and [midsized] business applications that Microsoft and Great Plains will provide."

The acquisition is structured as a stock purchase and is valued at approximately $1.1 billion. Each share of Great Plains common stock will be exchanged for 1.1 shares of Microsoft common stock. The transaction is subject to regulatory review.

"In 19 years of operations Great Plains has proved to be one of Microsoft's most innovative partners," said Steve Ballmer, president and CEO of Microsoft. "Microsoft and Great Plains see the future of business applications for small and [midsized] companies in the same way."

Microsoft and Great Plains, a longtime leader in midmarket financial and accounting applications, have had a strong partnership that dates back to the early 1990s. Microsoft has traditionally relied on key ISV partners to supply financial applications to its small and midsized sized customer base.

Oracle, a leader in the burgeoning Internet server and services market, markets its own eBusiness 11i suite of financial, manufacturing, CRM and HR applications to large enterprises. In recent months, large financial applications vendors such as SAP and Siebel have cozied up with IBM and its DB2 Universal Database 7.0 as Oracle encroaches on its territory.

While Microsoft's acquisition of Great Plains is not a direct play at the enterprise, the combined force will help Microsoft compete more aggressively with both Oracle and IBM in serving a growing sector of the market -- small to midsized businesses, observers say. It will also enable Microsoft to more readily offer Internet-based financial services to the midmarket via its bCentral portal.

As part of its .NET vision, Microsoft aims to offer Internet-based services to supplement its existing business of packaged products. The company recently launched a CRM offering from bCentral and is getting set to launch a Knowledge Workers Mega Service from its growing portal.

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