Oracle Ups Bid for Retek – Will SAP Raise Again?

Oracle bumped up its bid to acquire Retek late yesterday, in the second round of its battle with SAP for the retail applications developer.

The move was expected, but the new offer, US$11.25 per share to SAP’s $11, was lower than the $12 Gartner analyst Andrew White predicted yesterday. At the new high bid, Retek’s value is up to $631 million. Oracle originally bid$9 to top the $8.50 SAP had offered Feb. 28.

“It looks like a signal that Oracle is saying, ‘We think we are paying enough for Retek, but whatever you (SAP) will do, we’ll top it,'” White told CRM Buyer in an e-mail. SAP called its last bid final, “but that can be posturing as well,” White said.

Will SAP Counter?

Whether SAP will come back with another bid is difficult to predict. Thecompany does not have as much to lose by surrendering Retek, although EvanQuinn, group vice president for applications at IDC, suggests that thebidding war involves more than just retail applications market.

“Undoubtedly both firms have a ceiling price, but one would have to thinkthat if SAP was willing to pay $11 per share, they probably would be willingto pay $11.50 or $11.75 a share,” he told CRM Buyer. “It is hard to believe the price will go toomuch higher, but this does have the overtone of a grudge match.”

Non-Monetary Motivation

According to analysts, Oracle CEO Larry Ellison may sometimes sound reckless, but he’s unlikely toallow the battle to get the better of him.

“Despite Mr. Ellison’s often colorful remarks, in actuality Oracle is quitea conservative firm fiscally speaking. Oracle certainly would like to landRetek but will not pay a punitive price,” Quinn said.SAP, in fact, may be more motivated by emotional factors. “Though SAP would like to landRetek as well, SAP might also glean a little satisfaction by forcing Oracleto pay several hundred millions of dollars more for Retek than Oracle mighthave wanted.”

White has a different take on what will happen next.

“We do not expect it,” he said about another bid. “If SAP does, there aretwo scenarios: SAP still thinks it can push Oracle to spend more money onthe deal and so a small counter-bid, say $12, would force Oracle [to bid] again. Or,SAP may still think that it really can push Oracle out of the way, given thesupport from the Retek board [which endorsed SAP’s $11 bid Thursday beforeOracle’s counter]. That would favor a slightly higher bid — to give theRetek board more reason to distance themselves from ever supporting theOracle bid. But we do not think there will be another SAP bid. Either way,it will be fun to see the next step.”