US investment outfit Fletcher International Limited has agreed to an investment up to $225m in ailing Dutch ERP vendor, Baan Company NV over the next three-years. Fletcher has already put $75m into the company in return for options to buy shares from August 1, 1999 to December 2001 at a price of not more than $16 a share. Baan shares rose modestly by 4.7% on news of the deal to 9.95 euros – the equivalent of $11.54. Thus Fletcher need a rise of more than 38% in Baan shares in the next seven months for the deal to start paying off. Fletcher has further options to buy up to $150m in Baan shares over the next three years and, for its part, Baan can require Fletcher to buy up to $75m of further additional shares. Baan needs the cash to increase working capital and is likely to face a hefty reorganization charge in its fourth quarter of around $110m after axing 1,200 jobs (CI No 3,528). New York-based Fletcher also made a $40m equity investment in Informix Corp in 1997 and also put $13.5m into Syquest Technology Inc. Baan is facing huge problems with a sharp slowdown in growth and many analysts feel its software is now insufficiently competitive in the ferocious battle with rivals such as SAP.
