Oracle Corp. is biting back at rival SAP AG with the launch of a $525 million bid for Retek Inc., a retail software
vendor that SAP said it intended to purchase last week.
Redwood Shores, Calif.-based Oracle, which just completed a $10 billion acquisition of PeopleSoft in January, said it will offer $9 per share for Minneapolis-based Retek on Wednesday morning. Oracle is hoping to persuade Retek to reconsider SAP's $496 million, or $8.50 per share, takeover agreement.
Oracle also started buying Retek stock this week and so far has acquired 5.5 million shares, or 10% of Retek.
During a conference call with analysts Tuesday, Oracle CEO Larry Ellison said he had been in discussions with Retek executives to merge the two companies since October 2004. Oracle estimates that 80% of Retek's customers currently run Oracle's infrastructure software.
"The retail market is not dominated by any other company at this point in time," Ellison said. "It's a large market and it's an available market that we think is strategically important for us to pursue this acquisition."
Ellison said he is prepared to defend his company's grip on "the No. 1 position in the enterprise resource planning (ERP) software market in North America."
"We have already put extensive thought into our integration and joint product road map," Ellison said. "It's anyone's guess as to what [SAP] will do and how they will react."
"Retek and Oracle have a common vision that the next generation of applications is going to be based on industry standards and that sets us apart from SAP," Ellison said. "SAP is developing their current and their next generation of products with a variety of proprietary technologies, the most common of which is their SAP-specific ABAP programming language."
Oracle and Retek have been partners since 1986, hosting Retek software on Oracle systems to retailers. Nearly all of Retek's applications have been built on Oracle's technology platform using Oracle's development tools, Ellison said.
But don't expect Oracle to continue with a protracted battle for Retek, said Joshua Greenbaum, principal consultant at Berkeley, Calif.-based Enterprise Applications Consulting. After Oracle's more than 18-month battle to acquire PeopleSoft, the company is not in a position to win a bidding war against SAP, Greenbaum said.
"SAP smacked Oracle pretty hard and I was expecting Oracle to smack back," Greenbaum said. "If we learned any lesson with the PeopleSoft-Oracle debacle, it's bad for everyone and not a good idea to wage a protracted battle."
Retek announced that it had accepted SAP's offer last week; SAP spokesman William Wohl said the company is examining the offer, but has no immediate comment.
Oracle executives said the goal of the PeopleSoft purchase was to take away market share from SAP, which has held a strong grip on the No. 1 position in the ERP market worldwide.
Retek has about 200 customers in more than 20 countries around the world; its 2004 annual revenue was $174.2 million. The company's 525 employees are based in offices in Atlanta, London and Melbourne, Australia.