Will Microsoft Still Buy Great Plains?

The Justice Department is reviewing the $1.1 billion merger. Does that mean it's in danger?
Joseph RadiganFebruary 14, 2001

While Wednesday’s Wall Street Journal reported that the Justice Department is reviewing Microsoft’s pending acquisition of Great Plains Software, the deal does not seem to be in jeopardy. The same story also reported that Justice is investigating Microsoft’s $135 million investment in software developer Corel Corp.

Essentially, the Hart Scott Rodino review the Journal mentioned is a normal process for any large merger. Acquirers and sellers have to notify antitrust regulators when they announce a merger, and that’s exactly what Microsoft did with Great Plains.

According to wire service reports on Wednesday, the Justice Department review has stayed within the Hart Scott Rodino process.

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A Microsoft spokesman says, “Hart Scott Rodino sets out procedures for completing mergers, and that’s taking place right now. We’re confident that this agreement will proceed.” The spokesman could not say what information Microsoft has been asked for by the Justice Department.

A spokeswoman for Great Plains referred all questions back to Microsoft.

If the Great Plains acquisition is completed without interruption, it will represent one of the largest steps in a widespread consolidation in the accounting software industry.

The company’s products include Great Plains Accounting and Dynamics, and it has one of the largest customer bases in the accounting software market. For Microsoft, the deal represents one of its largest steps beyond its core market of operating systems and office productivity software. Microsoft plans to use the accounting software as a focal point for selling a range of Web-based, E-commerce services to small- and medium-sized businesses.

Charles Chewning, president of Solutions, a Richmond, VA, consulting firm that reviews accounting software, says that he’s found very little opposition to the acquisition.

The resellers and systems integrators he’s talked to “are not convinced that Microsoft can exert enough influence in the market to harm them.” He adds, “Nobody has panicked.”

There are some concerns that Microsoft might use its new Web-based bCentral service for small businesses to elbow its way into the accounting software and service market, but so far there’s been little evidence of this actually happening.

In fact, Microsoft’s strength has always been in selling shrink-wrapped applications, and it’s never developed a strong franchise in customizing applications for individual businesses. For this reason, some third-party consultants and integrators believe they may see a bit of a market boom from clients who need to integrate Microsoft’s programs with their legacy systems.

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