SAP AG, is sparking a bidding war with its software rival Oracle Corp., upping the value of its bid for retail software vendor Retek Inc., to over $600 million.
SAP now plans to bid $11 a share, compared with a Feb. 28 offer of $8.50 and Oracle's planned $9-a-share offer announced March 8, Walldorf, Germany-based SAP and Retek said in a statement today.
In addition, SAP said that under the amended merger agreement the termination fee has been increased from $15 million to $25 million.
The tender offer period will expire at noon (EST) on Friday, unless extended. SAP said this will be its best and final offer for Retek.
Laura DiDio, a senior applications analyst with Boston-based Yankee Group, said she wasn't surprised at SAP's latest offer, given the fact that both SAP and Oracle view Retek as important to their long-term goals.
The analyst added that SAP's offer is further proof of the current trend toward consolidation in the software industry. DiDio said this trend was perhaps most evident in Oracle's successful takeover of PeopleSoft Inc.
"What we're seeing is that as we emerge from the economic downturn, convergence and consolidation is the order of the day," she said. "What we're going to see is the stronger and bigger players are going to get stronger from acquisition."
DiDio said she wouldn't be surprised if Oracle was quick to make yet another counteroffer for Retek.
"Traditionally, Oracle has been very aggressive. They held onto the PeopleSoft acquisition like pit bulls," she said. "Oracle isn't afraid to go after what it wants."
Retek president and CEO Marty Leestma said his company supports the higher bid.
"We believe that SAP's offer is a good deal for Retek stockholders, and our board of directors has unanimously recommended that it be accepted," said Leestma in a statement.
Based in Minneapolis, Retek sells a retail application suite and best-of-breed software. With 2004 annual revenue of $174.2 million and approximately 525 employees, Retek has offices in Atlanta, London and Melbourne, Australia.
"The retail industry is a strategic priority for SAP, and we have many years of experience in developing and delivering retail solutions," said Léo Apotheker, SAP's president of global field operations and a member of the executive board, in a statement.
Oracle CEO Larry Ellison said recently that his company had been in discussions with Retek executives to merge the two companies since October 2004. Ellison said his company is in better position to integrate Retek's retail software. Oracle estimates that 80% of Retek's customers currently run Oracle's infrastructure software.