It took Oracle Corp. only a few hours to trump SAP AG, in its effort to outbid its rival, raising the value of
its bid for retail software vendor Retek Inc., to over $631.4 million.
Oracle now plans to bid $11.25 a share, compared with a March 8 offer of $9 and SAP's planned $11-a-share offer announced Thursday, the Redwood Shores, Calif.-based company said in a statement late Thursday night.
"Customers have told us they want Oracle to buy Retek," said Oracle CEO Larry Ellison in a statement. "Retek's applications are built on Oracle's technology platform. And Retek and Oracle share a vision of applications built using industry standards like Java, not proprietary programming languages like SAP's ABAP."
In addition, Oracle has already spent more than $50 million purchasing 5.5 million shares of Retek common stock, representing nearly 10% of the company.
SAP said Thursday that its latest bid was its best and final offer for Retek.
SAP has less to lose by not purchasing Retek, said Michael Dominy, a senior analyst with Boston-based Yankee Group. SAP already has its own retail-specific software suite and has competed with Retek for a share of the retail business, while Oracle has worked with partners, including Retek, to cater to the retail industry, Dominy said.
"I think SAP's decision to make an offer to acquire Retek was very shrewd on their part," Dominy said. "I don't think SAP will be willing to spend enough to outbid Oracle, and I think Retek makes a much better fit for Oracle since they've already been partners and they use common system integrators."
SAP and Oracle are battling over Retek because of a surge in IT spending in the retail industry. Retailers are increasing their investments in packaged software because their outdated legacy systems were built for the brick-and-mortar environment alone, said Robert Garf, an analyst who follows the retail industry for Boston-based AMR Research Inc.
"Retailers now recognize that they can use technology to create a competitive differentiation in their industry," Garf said.
The bulk of the technology being used by retailers consists of best-of-breed software, Garf said. That technology has rich functionality and focuses on price points, pricing promotions and workforce management software.
Although SAP has its own retail-specific software suite, over the last several years it has had trouble getting into the North American retail industry. The software giant has struggled to create applications that fit within the North American retail business model, Garf said.
"SAP has made significant advancements over last 12 months and have won some significant deals," Garf said. "It's been pretty public that Oracle has wanted to dive into the retail market and, as it stands today, without Retek they don't' have a retail-focused business application."