Faced with the reality of Baan Co. losing up to $1 million a day, British electronics and software company Invensys plc has taken control of Baan without acquiring the number of shares it originally wanted to own. Invensys said today that it's also immediately assuming responsibility for Baan's assets and liabilities, despite having acquired only 75% of outstanding shares, not the 95% the company had sought.
An Invensys spokesman says Baan was losing $1 million a day as Invensys waited for a group of 22 shareholders to tender their holdings--about 20% of shares. Rather than allowing Baan to reach a point where recovery was impossible, Invensys decided to act immediately, he says. Invensys will immediately begin financing Baan's operation, including customer support, sales and marketing, and software development, he says. The deal will formally close Aug. 15 at an emergency meeting of Baan shareholders at which Invensys, as the majority stockholder, will vote to give itself final control--including the power to liquidate any unneeded buildings or other assets. At that time, trading of Baan stock will likely be suspended by the Dutch stock exchange and the remaining 25% of shares will be purchased some time after that at Invensys' original offer of $2.65 per share.
Baan said last week that it expected to post losses of $85 million to $95 million for the second quarter of 2000, which ended June 30. The company reported net losses of $309.6 million for 1999. Many Baan shareholders are upset by the Invensys offer because their shares, which traded at more than $55 in April 1998, plunged to a low of $1.12 in May and recently traded in the range of $2 to $2.80. Invensys, which would pay more than $709 million for all Baan shares, had set a July 13 deadline for 95% of Baan shares to be tendered and extended the deadline before taking action today.
Baan interim CEO Pierre Everaert has estimated it would take more than $1.3 billion in cash to return Baan to profitability as a separate company. Once the deal is closed, Baan will become part of a new software division for Invensys, which manufactures electronics for manufacturing operations, as well as a line of enterprise resource planning software. The spokesman says Invensys has decided to continue using the Baan brand to market existing products and for new software offerings.