Microsoft Gets FAST for $1.2 Billion

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Microsoft announced today that it will acquire Norwegian enterprise search company Fast Search & Transfer (FAST) for about $1.2 billion in cash.

The purchase price is based on a $3.50 per-share valuation of FAST’s stock, 42 percent higher than its closing price of Jan. 4.

The purchase could add more muscle to Microsoft’s maneuvers against Google in the enterprise search market, such as its recent offer of its Search Server 2008 product as a free download. FAST’s technology is also used in storage products from EMC (Centera and Avamar), CommVault, HDS, Mimosa, Permabit — and Arkivio, whose assets were acquired today by Rocket Software.

Microsoft and Google are jockeying for position in the race to provide businesses with the tools to organize and retrieve information within their organizations and throughout the Web.

Microsoft sees in FAST a high-end complement to its existing SharePoint enterprise application, according to Jeff Raikes, president of the Microsoft Business Division.

“Enterprise search is becoming an indispensable tool to businesses of all sizes, helping people find, use and share critical business information quickly,” Raikes said in a statement.

“Until now, organizations have been forced to choose between powerful, high-end search technologies or more mainstream, infrastructure solutions. The combination of Microsoft and FAST gives customers a new choice: a single vendor with solutions that span the full range of customer needs.”

While the free offering of Search Server Express was an effort to commoditize Microsoft’s enterprise search applications in an attempt to reach out to smaller businesses, the acquisition of FAST is meant to round out its premium offerings.

For Microsoft, the enterprise-search market is a critical area in its multi-front war with Google. Long the enterprise standard-bearer, Microsoft is facing a substantial threat from Google as it seeks to extend the reach of its search services in the business environment. Both companies have been working to create broad-ranging enterprise-search portfolios catering to companies of all sizes.

In October, first learned of Google’s plans for its Search Appliance version 5.0, the universal enterprise search application designed to access other content-management systems, including Microsoft’s.

Meanwhile, IBM has been fleshing out its own suite of enterprise search services by courting the lower-end market. In November, IBM released a new version of the free OmniFind Yahoo Edition enterprise search software, an application with open source search support that was touted for its intuitive and easy-to-use interface.

As a sign of the consolidated competition among the major players in enterprise search, FAST announced a partnership with Cognos in May 2006, touting the combined expertise of the companies in enterprise search and business intelligence, respectively. Then, last November, IBM announced its intention to buy Cognos for $5 billion.

The Microsoft buyout is expected to encounter scant opposition among FAST shareholders, since the board of directors has unanimously recommended approval of the acquisition. Shareholders owning 37 percent of the company’s outstanding stock, including the company’s two largest institutional investors, have already expressed support for the transaction.

Despite being widely recognized as one of Norway’s fastest-growing technology firms, FAST has struggled to turn a profit. FAST CEO John Lervik is looking for the Microsoft acquisition to give the company a lift and expand its reach.

“By joining Microsoft, we can benefit from the momentum behind the SharePoint business productivity platform to really empower a broader set of users through Microsoft’s strong sales and marketing network,” Lervik said in a statement.

Microsoft said that it expects the acquisition to be finalized in the second quarter of this year.

Article courtesy of

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