Affording to overpay

8 January 2008 By Steve Rosenbush

Microsoft s M&A record is one of increasing desperation. On Tuesday it paid $1.2bn for moneylosing Fast Search & Transfer. The 42% premium, coming soon after an investment that valued Facebook at $15bn, reflects Microsoft s fear that its star is being outshined by Google.

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Microsoft said on Tuesday it would pay $1.2bn in cash for Norway's Fast Search and Transfer. The price represents a 42% premium over Fast's market value on Jan. 4, the last day of trading prior to the deal.

Microsoft wanted Fast's software, which helps corporations search their databases. Microsoft has been investing heavily in that market, where it faces competition from Google.

Fast expects revenue of $161m in 2007, and counts Disney, Comcast and other big companies as customers. Fast's growth slowed during the third fiscal quarter of 2007, when it reported a $100m loss tied to accounting changes. The company halted a controversial practice of booking letters of intent as revenue.

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