In its fiscal 1999 audited financial statement released yesterday, the Dutch software maker stated that failure to close the pending offer by U.K.-based Invensys "could have a materially adverse effect on the business and Baan's ability to continue as a going concern."
The acquisition, which was announced less than two months ago, remains subject to a condition that 95 percent of Baan's outstanding shares must tender in support of the offer. On Friday, Invensys, known for its manufacturing automation systems, said it controls more than half of Baan and has extended the deadline on its takeover bid to July 25.
Baan management warned that if the takeover offer is unsuccessful, it will increase customer concerns about the company's viability, fuel a management shakeout, and increase the challenges the company will face in seeking financing and negotiating with other potential partners.
The company, which has long been rumored as a takeover target, has suffered from seven straight quarters of losses and has seen its stock dangle in the $2-per-share range.
"The management and supervisory boards of the company continue to unanimously support the Invensys offer as the best way to secure Baan's future," Baan interim chief executive Pierre Everaert said in a statement. "The 1999 accounts confirm that additional financing would not solve the issue. We need a strong strategic partner to take the viability issue off the table and restore customer confidence if we are to return to a normal business cycle."
Baan competes in the enterprise resource planning (ERP) software market against rivals SAP, Oracle, PeopleSoft and J.D. Edwards. However, the company was late to embrace the Internet, while its counterparts have either partnered with other software makers or developed their own editions of Web-based business applications.
A growing number of companies are focusing less on back-office software and more on lucrative Web-based business applications such as customer relationship management (CRM) and procurement software.
Baan said net revenues for the year ended Dec. 31, 1999, decreased to $619 million from net revenues of $736 million in 1998. Software license sales for 1999 were $193 million, compared with $336 million in the same period a year earlier.