General Atlantic to buy Baan

The US private equity firm is buying the Dutch software business from UK group Invensys for £85m.

General Atlantic Partners, the US private equity firm that focuses on the IT sectors, is finalising terms to acquire Baan, the Dutch enterprise resource planning software company, from UK group Invensys. Although exact details of the transaction have not been disclosed it is understood that the firm will be paying £85m ($137m) for the business.

The sale will bring to a close an acquisition that the still-divesting engineering group will most likely want to forget. The group paid £470m ($757m) for Baan in 2000 and the then CEO of Invensys, Allen Yurko, declared soon after the deal that the Dutch software company was close to “financial meltdown.” Invensys is expected to incur a loss of about £575m on the disposal. Analysts estimate that Baan will have lost about £18.5m ($30m) in the last financial year on turnover of about £161m ($260m).

A formal announcement about the sale is expected soon, although the private equity firm’s due diligence is understood to have thrown up a few points that still require clarification. Invensys will be announcing its full year results later this week and the group has been keen to have the deal finalised by then. Invensys is expected to announce annual operating profits of around £250m but once restructuring charges, losses on disposals and goodwill write-offs are included it is expected to post a pre-tax loss that may exceed £1bn.

Invensys has said that it plans to sell a range of businesses as part of its effort to further reduce debt (at one time this stood at £3.3bn) – and estimates that these operations constitute two thirds of group revenues (£2.9bn).

Greenwich, Connecticut headquartered General Atlantic Partners specialises in investing in the IT sectors, typically investing between $25m and $100m per transaction. The firm has over $5bn of capital under management and has invested in over 120 IT companies since 1980 – with 60 companies at present in its portfolio and 20 of these from outside the US.