Sage taken to task by channel and rival

Accountancy software vendor Sage is facing pressure to come clean over its acquisition strategy, as its takeover target Pegasus and reseller launched protests on anti-competitive grounds.

Accountancy software vendor Sage is facing pressure to come clean over its acquisition strategy, as its takeover target Pegasus and reseller launched protests on anti-competitive grounds.

Pegasus reseller Diskel has expressed concern to the Office of Fair Trading after Sage said it was considering making a cash offer for Pegasus on 22 December 1999.

The move came a day after Pegasus revealed it had recommended a cash offer of £30 million from Australian software group Solution 6. If a bid from Sage materialises, it will be the Newcastle vendor's second stab at buying its arch-rival, having failed in 1996.

John Levell, managing director of Diskel, said: "Sage and Pegasus account for a substantial proportion of the market for lower and mid-range financial systems. The level of competition between the two has promoted product development in the UK and it's important that this level of competition remains.

"Sage has been making a pincer movement around Pegasus since its acquisition of Tetra last year, and every time Pegasus is involved in investment activity, there are murmurs from the Sage camp. It is muddying the waters," he added.

Chris Leak, commercial director of Pegasus, said the vendor would be consulting the Takeover Panel to seek clarification on Sage's position.

"Sage has never bid for a public company before. What it is doing creates false expectations and creates a false market in shares of Pegasus," he claimed.

"Sage doesn't want anyone else to get hold of Pegasus assets, but it knows it will find it difficult because of regulatory reasons."

"We've said to Sage in the past that if it can get round the competitive issues, then we'll talk. It's time for Sage to put up or shut up," he added.

John Savage, managing director of Sage reseller Savtec, said the acquisition of Pegasus by Sage would not be good for the market. "But if someone else bought Pegasus, it would give Sage a run for its money."

John Tate, chairman of Great Plains and Systems Union reseller Tate Bramald, agreed Sage would struggle to gain regulatory approval for acquiring Pegasus.

"Intervention by the OFT and the DTI was supposed to be a major factor in Sage's bid for Pegasus last time, and that was before it acquired Tetra."

Sage declined to comment further.