Oracle Claims Retek as SAP Withdraws

Oracle (Nasdaq: ORCL) and its CEO, Larry Ellison, have won the battle to acquire retail software maker Retek, signing a definitive merger agreement announced today. SAP (NYSE: SAP), Oracle's rival in the quest to buy Retek, bowed out of the bidding.

The database giant will buy Retek's outstanding stock for US$11.25 a share, or about $650 million total. Oracle made the offer Thursday in response to SAP's last bid of $11.

SAP will not walk away empty-handed. SAP and Retek had signed a definitive merger agreement at $8.50 a share Feb. 28, which entitles SAP to a termination fee. Originally set at $15 million, it rose to $25 million when SAP countered Oracle's $9 bid with an $11 bid of its own.

Easier Integration

Retek CEO Marty Leestma endorsed the deal in the companies' joint press release.

"We believe that Oracle's offer is a good deal for Retek stockholders, and all directors in attendance at our board meeting have recommended that it be accepted," he said.

Much of Retek's retail software was developed using Oracle tools for its databases, making integrating the companies somewhat easier than for two more disparate entities.

"In terms of business, Oracle did imply that Retek 'as is' would continue to exist inside Oracle, so this sounds easier than what would have happened inside SAP," Andrew White, senior analyst at Gartner (NYSE: IT), told CRM Buyer. "But will this all be easy for Retek clients? No, not easy, just easier than the alternative."

More At Stake

Analysts had said that Oracle had more to lose because it relied heavily on Retek to gain footing in the retail market.

"As a disciplined investor, SAP established a premium price for this niche business. However, we concluded that neither our shareholders nor retail customers would benefit from an auction process that would further inflate the purchase price, and in the long run, not deliver the returns we demand," SAP CEO Henning Kagermann said in a press release announcing that the company would not further pursue Retek.

The news comes just a day after Oracle announced that its CFO of eight months, Harry You, had resigned to become CEO of BearingPoint, a business services consultancy.

Oracle is in the late stages of integrating PeopleSoft after winning a long, hostile bid to take over that company.