Both companies base their applications on Microsoft’s [MSFT] .NET platform. While Netherlands-based Scala’s customers are mainly in mainland Europe and China, Epicor is strong in North America, the UK and Australia. Together the companies will generate 52% of revenue in North America.

California-based Epicor is offering $41.7 million in cash and 4.1 million of its ordinary shares for Scala, which values each Scala share at E3.27 ($3.83).

The company also has an interesting business model in that it targets the far-flung arms of major corporations. So while they may have SAP or PeopleSoft installed at head office, it can offer far less expensive applications for their subsidiaries in countries such as China.

A $2.1 million restructuring charge left Scala nursing a $2.5 million loss in its most recent quarter to September 30 when revenue fell 8.3% to $16.6 million. Experts expect it to end the year with revenue flat with the $73.4 million recorded in 2002.

Epicor suffered badly during the downturn in IT spending with revenue of $219.8 million in 2000, falling to $143.5 million last year. But it has recovered strongly since the middle of this year and in its most recent quarter to September 30 reported net income of $1.8 million on revenue 18.8% higher at $40.3 million.

Epicor is on the lookout for further acquisitions following its buy-out last year of Danish mid-market business applications vendor Navision a/s.

This article was based on material originally published by ComputerWire.