Microsoft is buying Danish software company Navision in a deal worth €1.5. billion.
The Danish company is Microsoft's first acquisition since December 2000, when it bought Great Plains Software.
Microsoft says Great Plains Software and Navision will complement each other and enhance its ability to deliver business solutions for small and medium-sized companies.
Navision has 1,300 employees in 30 countries but has failed to penetrate the US market.
Navision will become part of Microsoft's Business Solutions division. Its corporate headquarters in Vedbaek, Copenhagen, will be Microsoft's centre of development and operations for Europe, the Middle East and Africa.
Microsoft offered Navision shareholders $37 per share or Microsoft shares based on a specified exchange ratio. Navision says its board is unanimously recommending shareholders accept the Microsoft offer.