Microsoft Corp is so determined to own a flagship hit product in the consumer market that it is prepared to pay $1,500m in shares for a company that did had sales of just $223m in the year to July. The product is the Quicken personal finance package and the company is Intuit Inc, Menlo Park, California. The market got wind of the deal on Thursday evening, and the two announced that they had agreement around midnight GMT. Quicken is estimated to have about 70% of the market where the rival Microsoft Money program has about 10%, and in order to head off any anti-trust considerations, Microsoft is to sell Money on to Novell Inc on undisclosed terms. Microsoft is offering 1.336 of its own shares for each Intuit, a current value of about $76.50 a share, and there is a floor of $71 after which Microsoft would adjust the exchange ratio upwards. Shares of Intuit closed at $50.25 on Thursday and opened up $18.75 at $69 on Friday morning. It went public in 1993 at $20 a share. The key attraction of Intuit is that banks are beginning to offer its software in home banking services and Microsoft can see a growing revenue stream from taking a royalty on each transaction that uses the software. Electronic banking is also expected to become a key part of Microsoft’s planned on-line service. Intuit chairman Scott Cook will become Microsoft’s executive vice-president for electronic commerce. Novell will add Money to its WordPerfect Main Street consumer software line and says it will complement its own soon-to-be-released TaxSaver tax preparation software.
