Press Release

Thursday, September 16, 1999 < Prev Next >

Microsoft Agrees to Buy Visio In a $1.3 Billion Stock Deal

SEATTLE, Sept. 15—The Microsoft Corporation is buying the Visio Corporation, a maker of diagramming and technical drawing software, in a $1.3 billion stock deal that helps Microsoft fill a gap in its line of business products.

Visio's products let professionals like corporate administrators and designers make flow and organizational charts as well as more technical drawings.

The deal will strengthen Microsoft's grip on the market for business productivity software, which it already dominates with its Office suite of word processing, spreadsheet and presentation products.

”There are very few areas Microsoft is not a player in,” said Frank Catalano, an industry analyst in Renton, Wash. ”This is one of them.”

Visio, founded in 1990 and based in Seattle, says its technical drawing software is used by three million customers and accounted for $166 million in sales last year.

Microsoft said it had no plans to integrate Visio's software into its existing business software and would continue to sell it as a separate product. Microsoft, which also dominates the market for operating programs that control a computer's basic functions, is battling an antitrust lawsuit that contends it unfairly blends in new software features to squeeze out other technology companies.

Microsoft chose to acquire Visio rather than develop similar software in-house because Visio has a well-known product with loyal customers, Bob Muglia, a Microsoft senior vice president, said.

”It's a lot more attractive for us to use our sales force” to distribute an established product, he said.

The companies said it was too early to say if any of Visio's 700 workers would be laid off.

Each share of Visio common stock will be exchanged for .45 share, or $42.78, of Microsoft common stock, 28 percent more than Visio's close yesterday. The transaction, subject to regulatory review and approval by Visio shareholders, is expected to close by the end of the year.

Shares of Visio rose $6.375, or 19 percent, to $39.875, yesterday on the Nasdaq stock market. Microsoft, also traded on Nasdaq, was down $2.4375, to $92.625 a share.

The New York Times

Source page: http://www.nytimes.com/1999/09/16/business/microsoft-agrees-to-buy-visio-in-a-1.3-billion-stock-deal.html