Microsoft to Acquire Danish Software Firm

In a bid to extend its reach into small and mid-sized European companies, Microsoft Corp. said Tuesday that it was acquiring the Danish business software house Navision for $1.3 billion in cash and stock.

The acquisition would be Microsoft’s second-largest after its $1.5-billion purchase of U.S. graphic software maker Visio in 2000.

The move parallels Microsoft’s $1.1-billion acquisition in December 2000 of Great Plains Software, based in Fargo, N.D.

Both companies produce software for the same market, but analysts said Great Plains has been unable to gain much of a foothold in Europe.

Navision has likewise failed to significantly penetrate the U.S. market.

The Danish company, with some 1,300 employees in 30 countries, specializes in applications for enterprise resource planning, as well as customer relationship and knowledge management.

Customer relationship management programs allow a company to keep track of its entire relationship with a customer.

Besides recording purchases and notifying users of a customer’s service needs, it can link to a company’s financial catalog to provide sales estimates, discounts and cross-promotions, and can be used to create a marketing database based on customers’ buying habits.

Analysts saw the acquisition as a good strategic move for Microsoft, which had been considerably less aggressive about pursuing acquisitions during its antitrust trial, which is in its penalty phase.

“Considering the footprint they will cover globally, and the type of products they’ll be offering, it means great coverage for Microsoft,” said Ken Kiarash of Buckingham Research Group in New York.

Some analysts expressed surprise at the relatively high price Microsoft paid for the company--more than 6.5 times Navision’s sales.

As of the end of the first quarter, Microsoft had $38.7 billion in cash, equivalents and short-term investments.

Microsoft shares gained 85 cents to $49.47 on Nasdaq.