Shareholders Begrudge Baan Buyout

Baan Co. tried to "give comfort" to shareholders today by recommending that they sell their stock to Invensys plc, a factory automation-equipment and software vendor that is proposing a buyout. But a group of 22 shareholders holding about 20% of Baan's stock is shopping around for a better deal.

Baan interim CEO Pierre Everaert said today that the shareholders' group is threatening not to tender its shares to either drive up the $2.65-per-share price being offered by Invensys, put together its own bail-out plan, or find a buyer who will pay more than Invensys. The company is offering more than $709 million to purchase all Baan stock, which was trading in the $2.50-to-$2.60 range earlier today. Invensys has set July 13 as the deadline to buy 95% of the stock.

Everaert, who was interviewed after an emergency shareholders meeting at which Baan explained the Invensys buy-out plan, said Baan has not been contacted by the group. He said the shareholders are upset because their stock, which traded at more than $55 a share in April 1998, is now worth so little. In June, the stock plunged to a low of $1.12. Everaert said the disgruntled shareholders' group, which did not attend the meeting, cannot legally hold direct negotiations with Invensys. He added that the group is unlikely to put together its own financial package to solve Baan's financial problems because it would take more than $1.3 billion in cash to return Baan to profitability as a separate company.

An Invensys spokesman says the company already has purchased about 20% of Baan's shares on the open market, but does not know how many shares have been tendered. Invensys has taken no position on what it will do if unhappy shareholders do not tender their shares by July 13. Offering a higher price for Baan's shares might be an option, but completing the deal with less than 95% of Baan's shares is another, he said. If Invensys gets 95% of shares, the remaining shareholders will be forced to sell and Baan will become a private holding of Invensys. If less than 95% are tendered, the spokesman says, Invensys could operate Baan as a division in which shares are held publicly, or Invensys could back out of the deal.

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