Microsoft set to pounce on Navision

Shares in Navision soared as much as 24 per cent today after Microsoft was named as a buyer for the Danish software company.

The Redmond giant is thought to be in final talks with the European company, which specialises in CRM, financial and supply chain software for SMEs (small and medium sized enterprises).

Today Navision issued a statement to the Copenhagen Stock Exchange confirming it is investigating "the merits of any such transaction".

It continued: "Such investigations may or may not result in any agreement on a proposed transaction."

Both companies refused to comment on whether the statement related to Microsoft.

Analysts believe such an acquisition would be a good move for Microsoft, which last year bought Great Plains - a similar US-based company - for $1.1bn. The Navision deal is valued at $1.2bn and would complement Great Plains' US activities.

Tony Lock, senior analyst at Bloor Research, described the potential move as a "logical step at a logical time" for Microsoft.

He added: "Microsoft is looking to acquire companies in a number of areas to broaden its customer base and increase its back-end focus."

However, according to Andy Kellet, senior research analyst at Butler Group, the takeover could spell "potential danger" for UK company Sage.

He explained that while Sage is doing very well at the moment with growing profits, going head-to-head with the marketing muscle of Microsoft could cause it problems.

A report in today's Financial Times said an announcement regarding the deal will be made early next week.