Updated from 11:40 AM EST

SAN FRANCISCO -- Who said all the big software deals have already been done?

In a move to put some muscle in its business software division, Microsoft ( MSFT) announced Tuesday the acquisition of a Norwegian search developer that could strengthen Microsoft's Internet search engine in its battle against Google ( GOOG).

Fast Search & Transfer's board accepted Microsoft's offer of 6.6 billion Norwegian kroner, or $1.2 billion, subject to shareholder approval. Fast's two largest institutional shareholders have already accepted the deal.

Microsoft's per-share offer represents a 42% premium to Fast's Jan. 4 closing price.

It's the company's second acquisition within the past year to be valued in the billions of dollars. Microsoft picked up Internet advertising specialist aQuantive in mid-2007 for $6 billion, the company's largest acquisition to date.

With the fast pace of big mergers in the software sector over the past two years, some analysts have said the industry will see mostly small "tuck-in" acquisitions in 2008.

Fast's search software will be integrated into the Microsoft Office SharePoint server. The combination of Fast's search engine with SharePoint will give business users a broader choice of capabilities, Business Division President Jeff Raikes said on a conference call.

Fast provides high-volume search, allowing businesses to find documents buried inside corporate servers. Corporate search engines must filter for factors that are of particular relevance to business users, a level of sophistication lacking in Internet search, Raikes said.

"This is a very hot, fast-growing area, where the largest percentage of the customers" want more sophisticated search capabilities, Raikes said.

Although Fast's software was a major consideration, Raikes emphasized that bringing the company's research team on board was a bigger lure. He stopped short of saying that Fast CEO John Lervik and his team would be also directed toward Microsoft's Internet search software.

But having such talent in the house cannot hurt.

Asked how Microsoft will leverage Fast's talent for other Microsoft products, Raikes acknowledged the "relevance of the work they're doing to the Web search area, but we have nothing to announce at this time."

Fast's software differs from other business search packages, such as IBM's ( IBM) OmniFind, in terms of the scale of Fast's engine, Lervik said. It can search "not just millions of documents or records, but billions," he said. "It's much larger scale than anything else that's out there."

The Fast engine was designed from the ground up on a service-oriented architecture model, Lervik said. SOA allows applications to be reconfigured and extended quickly to other business uses, without a lot of development work.

Fast works with archiving products from HP ( HPQ) and EMC ( EMC). Those OEM partnerships acted as an incentive on Microsoft, which considered a number of other search developers before settling on Fast, Raikes said.

"The goal was to bring together the best team of people with the best technologies and combine their success in the marketplace with our expertise," Raikes said.

The new search technology will integrate with Microsoft's software-plus-services' strategy, allowing corporate users to choose from a blend of on-premise packages and Microsoft-hosted software, Raikes said.

Until now, businesses have been forced to choose between high-end search technologies and more mainstream offerings, Raikes said.

Microsoft was down 28 cents, or 0.8%, to $34.33 in recent trading.