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Baan shares fluctuate on takeover speculation

Speculation that the software maker is a prime buyout target sends its shares on a roller coaster ride, with one more suitor's name added to the pool.

As Baan's troubles have escalated over the past month, so has speculation that the company is a prime buyout target, with one more suitor's name added to the pool today.

In trading, shares of Baan fell more than 2 percent, following a recent stock spike fueled by investors' optimism that the company will find a new financing partner and rumors of potential buyers.

The Dutch software firm, which


Gartner analysts Bruce Bond and Daniel Miklovic say although many companies have been named as possible suitors, it remains to be seen what type of company will be able to best benefit Baan and its customers.

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has not ruled out the possibility of a takeover, has reportedly been wooed by companies such as Microsoft, database software giant Oracle, U.K.-based business software firm Geac and most recently London software firm Invensys.

Baan has been challenged by financial and management troubles that seem to have worsened since the abrupt resignation of ex-chief executive Mary Coleman. Baan's market capitalization has plummeted to roughly $515 million from more than $8 billion in two years.

Baan, which makes enterprise resource planning (ERP) software that automates such needs as a company's financials and human resources, is currently in serious takeover talks with Invensys, the Wall Street Journal reported today. Invensys develops software that automates control systems in industrial plants and commercial buildings.

The paper said a Baan spokesman confirmed that the company was in "intensive" talks with a number of potential buyers, but he declined to elaborate. Both Baan and Invensys were unavailable for comment today.

One analyst said an acquisition deal to buy a financially crippled and complex company like Baan would take a lot of effort and negotiating.

"Frankly, (Baan) would be a hard company to acquire," said Joshua Greenbaum, an analyst who heads Enterprise Applications Consulting. "They haven't finished the integration of all their different acquisitions, and now they are spinning off parts (of the company)."

"It doesn't have the right geography or the right essence of being a solid company that could easily be sold or acquired," Greenbaum said.

A European suitor might be the best match for the struggling firm, he said.

"Because of all the tremendous amount of problems (surrounding Baan), both financial and managerial, the U.S. is dried up for Baan." "You can't sell new Baan software in the U.S.," Greenbaum added. "It's not a viable product here."

Despite its cash-strapped position, a number of analysts have argued that the 22-year-old company, equipped with well-respected technology, will not immediately become a disappearing act but will continue to unload its acquired business units. In February, Baan sold financial software maker Coda, a business unit the company acquired two years ago in an attempt to target the middle market and add to its ERP applications suite.

The company was late to embrace the Internet while rivals SAP, Oracle and PeopleSoft have all been busy scrambling to shift their focus to provide more Web friendly, front office applications such as customer relationship management (CRM) and procurement software.