Great Plains signs deal to buy applications rival

Great Plains Software Inc., a Fargo, N.D., maker of business applications for midsize users, this week announced plans to acquire rival Solomon Software Inc. in a cash and stock transaction valued at about $140 million.

The deal with Findlay, Ohio-based Solomon continues a buying spree in which Great Plains has already purchased four other vendors (see story). The combined company will have annual revenue of about $225 million, according to Great Plains.

Great Plains said the acquisition will round out its line of applications and allow it to pick up Solomon's customer base of about 20,000 companies. Perhaps even more important, the deal gives Great Plains access to Solomon's workforce.

"With scarce IT resources, it's a real benefit for us to be able to pick up 380 (new employees) who have a ton of experience in this space," a Great Plains spokeswoman said after the deal was announced Monday.

Both Great Plains and Solomon make software that manages back-office business functions, such as finance, distribution, project accounting and manufacturing.

Great Plains targets companies with annual revenues of up to $250 million, but its own applications work best at the low and high ends of that range, the spokeswoman said. Solomon's software should help Great Plains do a better job of addressing customers that fall in the middle, she added.

But Laurie Orlov, an analyst at Forrester Research Inc. in Cambridge, Mass., said there's likely to be some product overlap in the combined company. Great Plains' main motive for the deal may have been the chance to acquire Solomon's workers, Orlov said.

The merger also handily eliminates one of Great Plains' many competitors, which also include vendors such as Sage Group PLC, Lawson Software Inc., J. D. Edwards & Co. and Oracle Corp.

The agreement calls for Great Plains to pay $35 million in cash plus about 2.6 million shares of its common stock. Solomon will operate as a separate business unit of Great Plains, and its applications will continue to be developed, Great Plains said.

Michael Rupe, Solomon's president and CEO, will stay on as president of the new business unit at Great Plains after the deal is completed. Great Plains said Gary Harpst, Solomon's co-founder and chairman, will also take a job at the merged company in a "key product strategy role."


Copyright © 2000 IDG Communications, Inc.

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