Baan Demolition Begins

The dismantling of Baan NV has begun. London-based Invensys announced this week that it has 72 percent of Baan's outstanding stock shares and has "assumed full management control" of the troubled ERP (enterprise resource planning) software company.

Ultimately, Invensys intends to liquidate Baan, but not before "a major restructuring," which will include layoffs, said Robert Goudie Jr., senior vice president, general counsel, and secretary to the board of Baan. With the $US690 million acquisition, Baan's employees will become part of the Invensys Software and Systems (ISS) division, consisting of 12,000 employees. However, approximately 1,000 of those employees will be let go because of redundancies, "the bulk of which will come from Baan," Goudie said.

Layoffs will affect "all areas of the company ... but special attention will be paid" to preserving as many staff members as possible in the research and development and customer service organizations, Goudie said.

Baan will become a cash holding company, set to be liquidated next year.

Invensys, the U.K.-based automation and controls company, sent in its own management team at the end of last month to oversee the situation until the deal was officially closed Aug. 1, Goudie said. As for the new managers, Laurens van der Tang will serve as president of the Baan group, which is based in Barneveld, Netherlands and Herndon, Va., and report to Bruce Henderson, the divisional chief executive of ISS.

Although other areas will be shrunk, there will be a "rapid expansion" of the CRM (customer relationship management) part of Baan's business, said Invensys officials. Invensys has also lent 100 million euros to Baan to keep it afloat during this transitional period, Goudie said. On Aug. 18, Baan will conduct a meeting of the remaining shareholders, Baan officials said.

Some industry analysts hoped that Baan would find a suitor that would not make such radical changes. However, most observers did note that the Invensys option was probably the best for customers.

An analyst for Cambridge, Mass.-based Giga Information Group, Byron Miller, said that he was "hard-pressed to find a company that would acquire [Baan]" when it was so close to "total collapse." Invensys has the financial stability and resources to salvage Baan, he said. "I still don't think it was the best possible outcome, but I don't think it was the worst one either," Miller said.

The fast action on Baan's CRM offerings is promising, Miller said. "It could be a separate business on its own -- if managed properly, it could have the fastest payback."

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