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Sage buying Pegasus could limit buyers' options

Sage's £27 million-valued conditional proposal to buy rival accounts software vendor Pegasus could force users down a cul-de-sac, observers said today.

Friday's announcement that Sage had made a "conditional proposal" of 425 pence per Pegasus share, has sparked fears that users could be left with no genuine alternative to the Newcastle-upon-Tyne-based software vendor.

"Sage with Pegasus would be so dominant in the UK," said John Ces, senior anlayst at market researcher Romtec. "There are only a few modular accounting software publishers in the mid-range sector and Sage and Pegasus dominate. If you're using a Pegasus product there aren't many places to go."

Ces said the move was all about market share. "Sage competes with Pegasus's Opera and Senior at the mid-range with Sovereign. I can't see a benefit apart from putting another person out of the competition."

He added that Pegasus products would likely be orphaned in the event of a purchase. Maintaining both companies' product lines would be "a bit like Microsoft buying Intuit and keeping Money. I'd be surprised if they kept the Pegasus products; it would be very confusing for customers and the products are too similar."