SAP Ups Bid To Wrest Retek from Oracle

SAP (NYSE: SAP) took another shot in its battle with Oracle (Nasdaq: ORCL), raising to US$11 a share its bid for Retek. SAP had been set to buy the retail applications provider for $8.50 a share, then Oracle countered at $9.

The war, however, is far from over, analysts say.

"I would be surprised if Oracle didn't go through another round," said Evan Quinn, group vice president for applications at analyst firm IDC, told CRM Buyer. "SAP's $11 per share bid, upping the ante by $2 per share, was an aggressive move by SAP -- no nickel and diming here."

Obvious Moves

Gartner (NYSE: IT) analyst Andrew White told CRM Buyer in an e-mail that the bid was far from a surprise and will prompt a further raise from Oracle.

"We thought SAP would bid at around $11, so now we expect one more bid from Oracle [to win] at around $12 to $12.50," he said.

The $11 offer is 5 percent higher than Retek's trading price at the market's close yesterday and sets the company's price tag at over $600 million. But the battle is about more than Retek's straight value.

"This is not about realizable revenue in the short term," White said. "This is about strategy. Oracle would base its retail strategy on Retek. SAP would [do so too] to a lesser, but not negligible, extent. This is about who will lead the application business in retail, period."

Oracle's Needs

Oracle has more at stake than SAP, because Oracle's retail software strategy is tied closely to Retek. Retek's retail customers include Nordstrom (NYSE: JWN) and Gap, some of the biggest names in the business.

"Though SAP would lose out by not winning Retek, it is [already] established in retail, it does have credibility, and it could go elsewhere to recover some of the IP it would lose should Retek go to Oracle," he said.

For SAP, the acquisition is, in part, a way to prevent Oracle from gaining ground.

"There are other acquisition options, but the reason why SAP is so focused on Retek is that Retek is Oracle's best fit in this space. For SAP, landing Retek is a two-fer," Quinn said, a way to gain value for itself and deny that value to Oracle.