Microsoft to Buy FAST for $1.2B

Microsoft has practically sewn up a deal to buy Fast Search & Transfer (FAST), an 11-year-old data classification and search engine provider based in Norway.

Redmond will pay up to $1.2 billion in cash for the outstanding shares of FAST, which is publicly traded on the Oslo Stock Exchange under the symbol FAST. The search company's two largest institutional shareholders, who control 37 percent of outstanding shares, have approved the transaction. It is expected to close in the second calendar quarter of 2008.

FAST's search technology underlies a range of enterprise Web search engines. It is part of CommVault's Simpana software for back-end storage and is incorporated in Microsoft's Windows Marketplace. FAST's hundreds of partners include storage OEMs such as EMC (Avamar and Centera platforms) and Permabit.

FAST competes with offerings from Google and Autonomy, as well as with smaller search and classification firms such as Index Engines. The company also entered the business intelligence market early in 2007.

FAST's solutions are definitely high end and customized, with average license fees ranging from $300,000 to $600,000; additional services ranging from $20,000 to $200,000; and maintenance fees starting at $60,000 annually.FAST's primary focus is what management terms "monetization," or the use of search engines embedded in applications for financial transactions. In 2007, FAST management reported that sales in monetization accounted for 70 percent of revenues, with enterprise search engine sales making 30 percent.

FAST projects about $200 million to $210 million in revenues for 2008 -- approximately a 10 percent market share of what IDC forecasts will be a total $2.1 billion spent on corporate search applications this year. FAST claims 3,500 installations among high-end customers worldwide, including Bayer, BASF, EDS, the Hong Kong Trade Development Council, ING, Merrill Lynch, and Pfizer, to name just a few.

It's not yet clear how Microsoft will incorporate FAST's products once the deal is done, though FAST's CEO John Lervik gave a strong hint a statement today: "By joining Microsoft, we can benefit from the momentum behind the SharePoint business productivity platform to really empower a broader set of users through Microsoft's strong sales and marketing network. It validates FAST's momentum and leadership in enterprise search."

It's not known yet whether Lervik and other managers will stay on at Microsoft, or how many of FAST's 750 employees in about 30 offices worldwide will transfer over. Stay tuned for more information as it becomes available later today.

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