The acquisition is structured as a stock purchase; each share of Great Plains common stock will be exchanged for 1.1 shares of Microsoft common stock.

By acquiring the supplier of mid-market business applications, Microsoft expects to bridge the gap between on-premise software and next-generation software and services, according to Jeff Raikes, group vice president of Microsoft's productivity and business services group.

"This acquisition is part of our vision of increasing the connection of businesses to the Internet," he said. "We want to make it easy for customers to get the benefit of interconnection and to make it seamless."

The united firms additionally plan to cater to a relatively underserved market: small and mid-sized businesses. "The combined companies aim to accelerate small and medium business efficiency and agility by offering software solutions for automating interconnected business processes," Raikes said. "By working with Great Plains we are fulfilling a mutual vision."

The acquisition will also create new opportunities for delivering and integrating next-generation solutions, according to Raikes.

"Down the road, the division will provide new capabilities that complement Microsoft's online service for small companies, bCentral," he said. "Additionally, the integration of technologies from both companies will create a fully interconnected generation of business applications built on the Microsoft .NET platform, accessed via a wide range of devices and deployed either as Web-based services or as on-premise, locally managed solutions according to the customer's requirements."