Microsoft is Buying FAST

No surprise here, that Microsoft is making a bid to buy Fast Search & Transfer (FAST). For the standard overview check out SEL or Marketwatch for more info.

An unnamed source unofficially said:

Organizationally, the plan is that we [FAST] become part of the SharePoint organization within the Microsoft Business Division (Microsoft’s largest division). This means that we will drive Microsoft’s enterprise search initiatives globally, with FAST technology becoming a key part of the Microsoft enterprise search offerings.

FAST is a B2B company and generally seen as the leading enterprise search player, competing with the likes of Autonomy, Endeca and the open source Lucene. I think it is also interesting to note:

• That much of FAST’s customer base are actually B2C players (=audience reach and traffic)
• FAST has made forays into the media space in the past, for example with the launch of FASTMedia last spring – see this piece on ZDNet

I would advise the integration team at MSFT to consider the following:

1. FAST has a large installed base of media and telecoms/mobile customers (many are top tier players, especially in Europe) using FAST’s search technology to power site search, local/IYP search, ecommerce and other search applications (like video, intranet/behind the firewall and various subscription services). TAKE AWAY: integration points for other MSFT products, potential ad network synergy.
2. FAST has a performance/pay-per-click/search advertising (sort of an “ad words in a box”) platform named AdMomentum. TAKE AWAY: another ad product and valuable publisher partnerships to embrace.
3. There is significant general web search expertise in the company (Note: FAST sold All The Web, which was a great search engine, to Overture [now part of Yahoo] back in 2003). TAKE AWAY: R&D talent pool for web search.

I would imagine that some of the FAST media and advertising assets might end up in other parts of the MSFT empire in their on-going battle with GOOG.

Here’s the full official PR blurb from the FAST website:

Microsoft Corp. (Nasdaq: “MSFT”) today announced that it will make an offer to acquire Fast Search & Transfer ASA (OSE: “FAST”), a leading provider of enterprise search solutions, through a cash tender offer for 19.00 Norwegian kroner (NOK) per share.

This offer represents a 42 percent premium to the closing share price on Jan. 4, 2008 (the last trading day prior to this announcement), and values the fully diluted equity of FAST at 6.6 billion NOK (or approximately $1.2 billion U.S.). FAST’s board of directors has unanimously recommended that its shareholders accept the offer. In addition, shareholders representing in aggregate 37 percent of the outstanding shares, including FAST’s two largest institutional shareholders, Orkla ASA and Hermes Focus Asset Management Europe, have irrevocably undertaken to accept the offer.The offer will be subject to customary terms and conditions, including receipt of acceptances representing more than 90 percent of FAST shares and voting power on a fully diluted basis, and receipt of all necessary regulatory approvals on terms acceptable to Microsoft. The complete details of the offer, including all terms and conditions, will be contained in the offer document, which is expected to be sent to FAST shareholders during the week of Jan. 14, 2008. The transaction is expected to be completed in the second quarter of calendar year 2008.

Goldman Sachs International acts as financial advisor to Microsoft; Merrill Lynch International acts as financial advisor to Fast Search & Transfer.

Please Note: I worked for FAST from June ‘05 to Sept ‘07 and mainly on the AdMomentum product – see TC piece over here for more on that adventure.

Follow-up Notes/Links: worth checking the post on Evan’s Ink – “fast and soft” re: this deal. This story is great for titles – Mr Battelle’s is Microsoft Acts Fast… And more coverage if you want to get all the angles: R/W Web, ZDNet Mary Jo Foley and more at ZDNet. A good analysis on the NYT bits blog. Here’s a good timeline on FAST deals and product annoucements 2003-07.

Positive comments from Sue Feldman at IDC – full piece here (login access only) and some highlights below:

IDC believes that there are deeper reasons for believing that Microsoft’s acquisition makes sense for both companies….

[Including] Ad Momentum, a monetization platform for search queries. Ad Momentum uses matching technology to match ads to queries and documents, handle ad word auctions and payments. It was launched in 2007, and could become an important product with the right (Microsoft) marketing muscle behind it as companies try to grab a portion of the multibillion dollar online advertising market.

…

FAST brings Microsoft a collection of technologies that should prove valuable across many of its products. It also brings them the expertise that they will need in deploying this complex technology. In turn, FAST acquires the resources that support their strong vision. Their understanding of the broader role of search in the future will help to shape the market’s understanding, now that they have Microsoft’s resources behind them. They are shortly to bring to market a new generation of their information access platform. With Microsoft’s help, it could be made a gold standard for information access in the enterprise…