SAN FRANSISCO — SAN FRANCISCO -- Microsoft Corp., in the software industry's largest acquisition ever, agreed yesterday to acquire Intuit Inc., the producer of the leading personal finance program, in a stock swap valued at about $1.5 billion.
For Microsoft, the world's largest software company, the ownership of the Quicken program would put the company in a position to dominate the emerging market for writing checks, paying bills and shopping electronically from home.
Quicken, with 6 million users, is already the leader by far in financial software for personal computers, and is used by a few small banks in the United States as the means for letting their customers do their banking from home. If Quicken can become the dominant software for electronic financial transactions -- whether through personal computers and modems or interactive television sets and cable systems -- Microsoft could skim royalties or fees from each transaction.
The recurring revenues from the use of a product like Quicken could easily outweigh the sales of the software itself, which is priced at $40. By merely charging a small fee for each transaction using Quicken -- if repeated millions of times a day around the country or the world -- Microsoft could see its profits grow astronomically.
"Certainly managing finances, in the broadest sense, is one of the major opportunities that that electronic world will present," Microsoft's chairman and chief executive, William H. Gates III, said yesterday at a news conference in Palo Alto, Calif. "That is a major part of the future of software, and Microsoft wants to be there."
Although the acquisition was announced after the close of bTC trading yesterday in New York, shares of Intuit had risen in recent days on speculation about a deal with Microsoft. Shares of Intuit rose $3.25, to $50.25, in Nasdaq trading yesterday. Shares of Microsoft rose $1, to $57.25, in Nasdaq trading.
Based on Microsoft's closing price and an exchange ratio of 1.336 shares of Microsoft stock for each share of Intuit, Intuit shareholders would receive $76.49 a share.
In acquiring Intuit, Microsoft, based in Redmond, Wash., is conceding the weakness of its own personal finance software, Money, which has captured only a tiny share of the market since its introduction a couple of years ago.
Apparently to stave off antitrust concerns, Microsoft, as part of the deal, will sell Microsoft Money to its software rival, Novell Inc.