While Zia offered a formal blog statement on Tuesday (re: the Microsoft offer), he did one better by talking to the blogging team directly, by phone today.

To facilitate timeliness I’m covering this in 2 parts: Part 1 is a general recap of the meeting; Part 2 covers the industry response.

From a financial perspective the Microsoft offer put a 42% premium on FAST’s stock price, but is equal to the fully diluted equity value of the company. The offer needs 90% stockholder approval, but already has board approval and support from key stockholders. As with most deals such as this, trading of the stock was suspended during negotiation. As trade resumed, Microsoft displayed their confidence by buying 10.1% of FAST’s stock base.

In a letter to customers, FAST expressed their excitement and commitment to the offer: “The acquisition not only validates FAST’s vision and long-held leadership in the search marketplace, but it also opens a new chapter in the ongoing evolution of search. We are now moving toward enabling customers to fuse cutting-edge search technologies with leading business productivity capabilities”

The Microsoft Strategy
The primary focus of the acquisition is toward bolstering SharePoint’s search capability. While the FAST team will be aligned to SharePoint development, the company will exist as a wholly-owned subsidiary. FAST will continue to service its existing markets, including sales to LINIX shops.

If you’d been paying attention (apparently I wasn’t), you’d have noted that Microsoft and FAST had already been working to bring the two technologies together. Back in July 2007 Microsoft released federated search connectors to FAST ESP.

When SharePoint is competing for corporate sales, a primary decision disqualifyer is search. The addition of the enterprise-class performance of FAST ESP gives Microsoft greater leverage in major deals for which search is an important criterion. Many are saying this fills a big hole in the SharePoint offering. This acquisition will also decrease the complexity of dealing with two different companies to obtain key enterprise workplace functions.

Technology aside, this deal will immediately increase Microsoft’s European presence. Microsoft will acquire a major research footprint in Europe and takes an increased posture as a pro-European company.

The Future
This deal reinforces FAST’s ongoing commitment to innovate the enterprise workspace. While search is part of Enterprise 2.0 it is not all of it. This deal is a critical step to put the user in control and positions Microsoft to better compete in a user-reactive market. This radically changes the search marketplace and puts the working-class in a better position to participate in the benefits of 2.0. It definitely increases the potential to ‘shorten the distance’ between the individual and critical information.

There is a lot to be decided over the next several weeks and months — no roadmap for product development has been decided. With FASTforward ’08 just a few weeks away, the conference will swell with conversations around the latest news, as it progresses (and an increased Microsoft presence will be evident). Zia reiterated a commitment to the unique experience I was appreciative of last year: the FASTforward event in Orlando will be the place to engage in deep discussions between Customer/Partner/ISV/analyst. It will be THE event to participate in truly industry-significant discourse around the future of the enterprise workspace.

Come be a part of it (or you’ll have to just read about it).