The software giant has announced an offer to acquire Norwegian enterprise search provider FAST, ending months of speculation of a planned move into the premium search market.
Microsoft offered a full cash tender for FAST and has agreed to buy the company for around 6.6 billion Norwegian kroner (US$1.23 billion).
"FAST's board of directors has recommended unanimously that its shareholders accept the offer," Microsoft said.
With the initial steps to acquisition now taken, both companies are preparing the formalities of the undertaking, expected to begin early next week when the complete details of the offer are released and an offer document sent to FAST shareholders.
FAST provides OEM search integration, risk management and monitoring as well as customized search applications to a range of customers such as ANZ and Symbian.
"The fact that Microsoft has made an offer is not a particular surprise for two reasons," Mike Davis, senior analyst at research firm Ovum, said in a research note.
"Firstly, the November releases of Search Server and Search Server Express, while offering a powerful enterprise search product, did not offer the pre-built and specialist solutions that many organizations are seeking," he said. "Secondly, FAST has had some well recorded financial and accounting difficulties, and only a large company such as Microsoft could afford to take on an organization which may still have some undiscovered liabilities."
According to Davis, Microsoft executives had been talking of a move into the premium search market for some time as a means of competing against the U.K.-based Autonomy and the U.S.-based Endeca, but it was not expected until around 2010.
Davis added FAST represents a significant purchase for Microsoft and may make other large vendors consider similar acquisitions, rather than in-house development.
The acquisition is expected to be complete by the second quarter of the calendar year 2008.