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Microsoft overcomes suit to complete Groove buy
$120m deal closed...

By Ina Fried

Published: Monday 11 April 2005

Microsoft has completed its deal to acquire Groove Networks, a move that comes days after a court rejected a bid to stop the deal.

Last week, a Delaware judge blocked an effort by ex-Groove executive Michael Matthews to halt the deal. Matthews had sued to stop the transaction, valued at $120m, saying it was unfair to certain employees who had been given stock in the privately held company, according to reports.

Microsoft said that, as planned, the Groove product and team will become part of Microsoft's Information Worker business - the unit that is home to Office. The company said it will sell current and future versions of Groove's collaboration software on a standalone basis "while also exploring ways to take advantage of those technologies in others ways".

Groove founder Ray Ozzie, who is now a Microsoft chief technical officer, said: "While Groove and Microsoft technologies already work together in very powerful ways, we've only just begun to realize opportunities to better address the needs of information workers at a time when the very nature of work itself is changing. I'm eager to contribute my experiences and lessons learned over the past 20-plus years in computer-supported collaboration to help shape the next wave of Microsoft Office System technologies and other future products."

Microsoft announced in March its plans to purchase Groove. Microsoft has been an investor in the collaboration software maker since 2001. Founded in 1997, Groove has about 200 workers and is based in Beverly, Massachusetts. About 95 per cent of its workers are joining Microsoft, Groove said.

The company's software, known as Groove Virtual Office, lets people from different companies collaborate by working over secure internet connections. The product uses a peer-to-peer design in which individual PCs can communicate directly with one another to share documents or communicate via instant messaging.

Ina Fried writes for CNET News.com. CNET News.com's Martin LaMonica contributed to this report.