Great Plains grabs FRx, PWA in e-comm strategy.

FARGO, N.D. -- Less than two months after the parent of its cross-country rival Sage Software acquired Best Software, Great Plains announced the acquisitions of two vendors whose technologies overlap Best.

Within hours of each other, Great Plains issued separate announcements that it had distinct, definitive agreements to acquire both Denver-based FRx Software, one of the middle market's best-known developers of business reporting and analysis applications, and PWA Group, a United Kingdom-based developer of human resource and payroll software.

The deals could have a combined value of more than $100 million. Great Plains plans to close them by issuing FRx one million shares of its stock, and issuing PWA 407,000 shares and $9.5 million in cash. Great Plains' stock was trading at $70.50 per share the day before the pending deals were announced, but that may not be the stock price on which the deals are based.

Great Plains said that it plans to focus on electronic commerce product development with both companies after they come into its fold. The Fargo, N.D,-based Great Plains may also be signaling that it intends to become the uncontested champion among middle-market financial applications vendors.

The deals were announced less than two months after Sage plc, the parent of Irvine, Calif.-based, Sage, initiated its acquisition of Best Software, the middle market's leading developer of fixed assets and human resources software with close to 50,000 users of its FAS and Abra product lines.

At the time, Sage and Best officials said that Great Plains had tried, unsuccessfully, to acquire Best. They also indicated that the most likely way for any one vendor to dominate the middle market would be by acquiring the vendors of well-established products in that segment.

"Size does matter," said Sage chief executive David Hanna. "It's now a two-horse race and we are the ones best-positioned to take a leadership position."

Great Plains' latest deals seriously challenge Hanna's contention by bolstering its position in the United States and internationally, and in two of Best Software's specialty technology areas -- human resources and analytics. Earlier this year, Great Plains acquired Forestar Group, the developer of fixed assets management software, another Best specialty.

Moreover, the two latest deals could further bolster Great Plains' capabilities in electronic commerce, an area where it has been a trend setter among middle-market accounting software vendors. For example, Great Plains was the first middle-market vendor to make its applications available via an Internet-based application service provider system, and has been among the first to roll out electronic commerce modules.

Great Plains said that it hopes to work with PWA's existing technology base to "further deliver on its vision of automating all processes that occur between a company and its employees." PWA's products include an "E-Xtend" line that utilizes corporate intranets to allow employees to automatically update their human resource information and enable managers to more readily access that information.

With FRx, Great Plains said that it hopes to develop a "broad suite of Web-centric applications." FRx, along with Great Plains, belongs to a consortium of technology and accounting industry interests developing "XML-based Financial Reporting Markup Language," also known as XFRML -- a programming language that formats financial reports for transport across the Internet and for viewing on browser-equipped computers.

The FRx deal has the greater implications on middle-market, U.S.-based companies, because the Denver-based company's reporting and analysis products integrate with more than 25 other brand-name software applications, including products from Great Plains' rivals Epicor, Solomon and Infinium. Great Plains has had an original equipment manufacturer agreement with FRx since 1994.

Upon completing the acquisition, FRx will operate as a wholly owned subsidiary and continue marketing through its existing distribution agreements with other vendors, while looking to develop new distribution relationships, Great Plains said. Chris Scherpenseel, former FRx chief operating officer, will assume the role of president of the Great Plains' FRx subsidiary.

Great Plains said that it plans on "integrating" PWA operations into its own, but did not specify how that company will be structured after the acquisition is completed.

Any initiatives with PWA will probably be geared more toward companies of $100 million or more in annual revenue, which represents the high-end of Great Plains' existing customer base, as well as the high end of the middle market.

PWA specializes in what Great Plains calls "upper-tier, middle-market companies." It provides its software products and related consulting and training services to more than 1,400 customers in 58 countries, including 1,000 in the United Kingdom.

"Combining our strengths and talents with PWA's will accelerate our ability to deliver comprehensive e-business human resource and payroll solutions to the upper-tier of the mid-market," said Great Plains chief operating officer Jodi Uecker-Rust. "Our expanded solution-offering increases our global reach and helps to further define our market leadership."