Baan Halts Trading, Rumors of Takeover Rife

SAN FRANCISCO (05/30/2000) - Troubled ERP (enterprise resource planning) software vendor Baan Co. NV today halted trading in its shares, as rumors intensified that the company is soon to be acquired.

Before Baan halted trading of its shares on the Nasdaq stock exchange at 1:48 p.m. EDT, the ramp-up in acquisition rumors helped propel its stock to US$4.19, a rise of 54 percent on the previous close of trading.

George Thompson, a spokesman for Baan, confirmed that the company has halted trading in its shares. "I have no further information about whether an announcement is expected today," he said in a phone interview today, adding that it's possible that some news might be forthcoming from Baan later today.

"I'm not sure when Baan will resume trading," he added.

Thompson said it would be "inappropriate" to comment on any of the acquisition rumors. The company currently being most favored as Baan's rescuer from its financial woes is U.K. engineering company Invensys PLC which may well announce an all-cash offer for the ERP vendor as early as tomorrow, according to reports.

Invensys is due to report tomorrow preliminary financial results for the 12 months ended March 31, 2000, according to information on the company's Web site. Invensys Chief Executive Officer Allen Yurko is due to host a presentation in London to review the year.

Other possible suitors for Baan's hand include U.S. players with their own rival ERP offerings -- Oracle Corp. and Computer Associates International Inc.

(CA) -- even dominant ERP vendor SAP AG has been mentioned.

Of particular interest to potential buyers is Baan's CRM (customer relationship management) business, the result of its acquisition of Aurum Software Inc. in May 1997. In a move widely seen as paving the way for a sell-off of its CRM business, Baan announced plans to form a new subsidiary focused on the Net CRM market. [See "Baan to Form Dedicated E-CRM Company," March 29.]Baan has been in play for many months, but of late the acquisition rumors have significantly heated up, and with today's halt in trading, the likelihood that the company will be bought is becoming more of a reality. [See "Baan Shares Soar on Deal Rumors," May 25.]Last month, Baan reported its seventh consecutive loss-making quarter when it released financial results for the first quarter of fiscal 2000. [See "Baan Posts Widening Loss, Shrinking Revenue for Q1," April 20.]Fears of the impact of the year 2000 computer problem meant that most of the major ERP players had a tough 1999, but Baan appeared unable to recover momentum once 2000 begun after a poor financial performance during fiscal 1999.

In January, Baan's Chairman and Chief Executive Mary Coleman unexpectedly quit.

At the same time, the company announced the closing of 14 branch offices and a cut in its workforce of around 4 percent. [See "UPDATE 2: Baan CEO Departure Disappoints Analysts," Jan. 4.] Coleman had come to Baan when the company acquired Aurum for $250 million in May 1997.

Later in January, Baan's Chief Financial Officer James Mooney also quit. The following month, the ERP vendor announced the hiring of an investment firm -- Lazard Freres & Co. -- to help sell off part or all of the company. The news came hard on the heels of Baan reporting a $236 million net loss for the fourth quarter of 1999.

The ERP vendor then in March announced the selling off of its Coda financials software unit for $49.3 million cash to U.K. company Science Systems PLC. Baan completed its purchase of U.K.-based Coda Group PLC for about $83 million in May 1998.

Baan, with dual headquarters in Barneveld, the Netherlands, and Reston, Virginia, can be reached at +31-342-42-8888 or at +1-703-234-6000, or on the Internet at http://www.baan.com/. Invensys, based in London, can be reached at +44-207-834-3848 or on the Internet at http://www.invensys.com/.

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