Accountancy software group Sage yesterday unveiled plans to expand its presence in the US with the £63.9 million acquisition of Oregon-based firm Timberline.

Sage said the offer, which has been agreed with Timberline's management but still requires the backing of the US company's shareholders, would extend its reach into new sectors.

But shares in the Newcastle-based group slid five per cent as investors raised an eyebrow at the price tag which offered Timberline shareholders a premium of one third on top the NASDAQ-listed stock's closing price last night.

Analysts said the acquisition did not appear to live up to Sage's previous record of buying smaller businesses for which the proportion of costs which can be stripped out after becoming part of a larger group is relatively high.

But Sage said the acquisition made good business sense and fitted with its strategy of acquiring locally-developed software brands.

Timberline, which has 20,000 customers, provides accounting and business management software to small and medium-sized firms in the construction and real estate industries.

If shareholders give the deal the go-ahead, Timberline will become part of Sage's existing US business Best.

Chief executive Paul Walker said: "We expect to create value through selling Timberline's products to our large and growing US customer base, and also through selling additional Sage products and services to Timberline customers."