RealTime IT News

Microsoft Scoops Up Location-based Solutions Firm

Software behemoth Microsoft Corp. on Tuesday announced that it agreed to acquire Vicinity Corp., a Sunnyvale, Calif.-based innovator and integrator of location-based services, in a cash transaction valued at approximately $96 million.

The key reason for Microsoft's interest is Vicinitiy's portfolio of technology-based solutions that allow businesses and governments to find available products and services in a specific area, which in turn let's Vicinity's customers analyze and direct their own customers to a brick-and-mortar store, branch or outlet near them that have the inventory.

A combined offering could be a huge leap forward for Microsoft's MSN MapPoint service amid its head-to-head competition with the venerable MapQuest -- at least in the area of software development and integration. MapQuest is subsidiary of AOL Time Warner.

"Vicinity's extensive experience in providing end-to-end solutions and value-added services perfectly complements Microsoft's MapPoint .NET XML Web services platform," said Ted Johnson, Corporate Vice President at Microsoft. "This acquisition will accelerate the adoption of location-based technology as a valuable ingredient of mainstream enterprise application development."

The transaction is structured as a cash merger, in which Vicinity shareholders will receive $3.33 in cash in exchange for each Vicinity share -- a healthy premium from its Tuesday close of $2.24.

The transaction is subject to approval by a majority of Vicinity shareholders. Certain shareholders of Vicinity holding approximately 30 percent of the outstanding stock have already agreed to support the transaction.

Consummation of the transaction is subject to customary closing conditions, including Vicinity shareholder approval and approval of the relevant antitrust authorities.

The transaction is expected to be completed before the end of first quarter of 2003 and will result in Vicinity being merged with the MapPoint Business Unit at Microsoft. Both Microsoft and Vicinity expect an integration road map that helps assure customers, developers and third-party vendors of uninterrupted services and a seamless transition.

Earlier this year, Vicinity rejected another takeover proposal from a private partnership that consisted of former employees called Moloco. That deal, which valued the company's stock at $2.65, was rejected.