Fast shares, which had been suspended all day on Monday, jumped to the bid level and then eased off slightly to 18.9 Norwegian crowns ($3.53) in early trading on Tuesday.
"Fast's board of directors has unanimously recommended that its shareholders accept the offer," Fast Search & Transfer said in a statement.
"This offer represents a 42 percent premium to the closing price on January 4 (the last trading day prior to this announcement) and values the fully diluted equity of Fast at 6.6 billion Norwegian crowns or approximately $1.2 billion," Fast said.
Shareholders with 37 percent of Fast's stock, including its two biggest institutional investors--Norway's Orkla and Hermes Focus Asset Management Europe--have agreed to accept the cash offer, the companies said.
Analysts said they believed Microsoft's bid would succeed.
"The bid is fair. There can always be another (rival offer), but I believe Microsoft will get it for 19 crowns a share," said analyst Erik Hjulstroem at Kaupthing Bank.
Standard & Poor's analyst Matthias Eriksson said: "I don't think there will be a competing bid. The premium is too high, so I think people will be glad to get 19 crowns."
The deal is subject to regulatory approval and acceptance from shareholders with more than 90 percent of Fast's shares, Fast Search & Transfer said.
Microsoft said in a statement the transaction is expected to be completed in the second quarter of 2008.
Fast providesto companies.
"Enterprise search is becoming an indispensable tool to businesses of all sizes, helping people to find, use, and share critical business information quickly," Jeff Raikes, head of the Microsoft Business division, said in Microsoft's statement.
"The combination of Microsoft and Fast gives customers a new choice: a single vendor with solutions that span the full range of customer needs," he said.
The companies havethat help businesses deliver productivity and improved results, Microsoft said.
FAST has high-end search solutions, and Microsoft offers worldwide customer reach and an extensive partner network, the Redmond, Wash.-based software giant said.
Goldman Sachs is acting as financial adviser to Microsoft, and Merrill Lynch is advising Fast.