Microsoft in $1.3bn Navision deal

Jesper Balser, President and joint Chief Executive Officer of Navision, recommends Microsoft offer

COPENHAGEN, Denmark (CNN) -- Microsoft has agreed to buy Danish business software maker Navision for $1.3 billion.

Microsoft (MSFT), the world's biggest software company, is offering Navision shareholders 300 crowns ($36.92) per share in cash, a 12.4 percent premium to Monday's close, or the equivalent in Microsoft shares.

Acquiring Navision, which is majority-owned by its management, will make Microsoft one of the world's biggest providers of planning software, like accounting and forecasting programs, for medium-sized companies, analysts say.

Microsoft recently bought U.S. enterprise software company Great Plains in an effort to move into the high-growth market for business planning software. Microsoft estimates that the global market for software for small and medium-sized businesses is worth about $27 billion.

Analysts said the deal would be good for Navision as well, given the growing competition in the mid-sized business software markets from rivals like Germany's SAP (FSAP) and U.S.-based Oracle (ORCL).

The Microsoft brand name and marketing strength would also help Navision fend off rivals, they said.

"The board of directors has unanimously decided to recommend the offer from Microsoft to its shareholders,'' Navision said in a statement.

Navision stock, which hit a record high of 999 crowns in January 2000, soared more than 11 percent to 297 crowns in early Copenhagen trading on Tuesday.

The company is already a key partner for Microsoft, which has a dominant position in desktop software, including its operating system Windows and its Office software for word processing, spreadsheets and presentations.

Navision also released its third quarter earnings report, saying earnings before interest, tax and amortisation (EBITA) was 45 million crowns. Analysts polled by Reuters had forecast an average EBITA of 53 million crowns.

Sales in the three-month period to the end of March were 380 million crowns, slightly below analysts expectations.