194525 Resource 125361 126222 200444 1200068308765 1213109077854 Controlled Deal Analysis: Microsoft to Acquire Enterprise Search Vendor FAST

First in 2008 of Anticipated Strategic M&A Serving Enterprise 2.0

On January 8, <a title="Microsoft Offers to Acquire Fast Search & Transfer" href="http://www.microsoft.com/presspass/press/2008/jan08/01-08FastSearchPR.mspx" target="_blank">Microsoft announced</a> its intent to acquire public Norwegian enterprise search vendor FAST for $1.2 billion in cash.  FAST’s board unanimously approved the bid, as have shareholders representing 37% of company shares, which include its two largest shareholders.  The deal is expected to close next quarter.  The purchase price represents 42% and 85% one-day and 30-day premiums to FAST’s share price, and values the unprofitable company at 6.5x Enterprise Value/Last-Twelve-Months Revenues.  This multiple is about two times the mean/median paid on other deals in this space, according to Updata’s M&A database.  The target was rumored to have other bidders, including one or more of Autonomy, Oracle, SAP and Cisco.  Enterprise search is critical to Microsoft’s enterprise strategy. FAST’s advanced technology and service-oriented architecture give Microsoft faster search and better data classification and integration capabilities.  Microsoft will use the acquisition to drive growth of its SharePoint knowledge management platform (an $800M business last year with 85 million users) among larger enterprises.  SharePoint, which now can search millions of documents, will be able to search billions with FAST.  The technology also facilitates search across most data types – documents, e-mails, unstructured data, and behavioral and event data.  This has potentially broad implications for informational, organizational and system management.  FAST also has non-commercialized web search technology that could benefit MSN.  Microsoft will continue offering its recently released, free search tool, Search Server 2008, for use by smaller businesses. The share price for Convera, a public enterprise search company, rose 20% two days following deal announcement.  They and other smaller independents are now, more than ever, in the acquisition sights of EMC (for Documentum), Google (to move upmarket in the enterprise), IBM (to boost the OmniFind offering, which is competitive with FAST), and Oracle (Secure Search is a competitor).Microsoft said it is buying FAST to make “enterprise search for workers tomorrow what Internet search is for consumers today”, and cited an IDC estimate that an organization with 1,000 information workers generates $5 million in incremental cost due to “time that is wasted looking for information and not finding it.” This is the first big Enterprise 2.0 deal of 2008 - and certainly not the last. 10 application/xml false Convera Enterprise 2.0 enterprise application software enterprise search FAST Fast Search & Transfer ASA Microsoft SharePoint Today you can find football scores online in five seconds, but inside somebody's company it can take five hours to track down last year's business plan. Mozilla/4.0 (compatible; MSIE 7.0; Windows NT 5.2; .NET CLR 1.1.4322; .NET CLR 2.0.50727; InfoPath.1; .NET CLR 3.0.04506.30) 127.0.0.1 127.0.0.1 fbartolomey 208.82.213.34 false true false false true 125361 blog blogsite/UpdataAdvisors/web