Oracle will this morning officially launch its bid for Retek, which at $9 cash per share is fifty cents richer than SAP’s offer of February 28. The total value of the deal would be approximately $515m, compared to SAP’s $496m offer.
Retek specializes in applications for retailers. Oracle says that this is an under-penetrated market, that Oracle is a better home for Retek, compared to SAP, both technologically and financially and that SAP only got to make an offer because Oracle was distracted.
We decided that we were going to make a bid, partially to defend our number one position in North American applications market, Larry Ellison, Oracle’s CEO said in a conference call, sounding as stressed-out as he usually does in these kinds of situations.
We were a bit distracted with the PeopleSoft acquisition process when SAP decided to make their bid, Ellison said. The companies had been in talks since September, he said. It’s been our intention for some time to acquire Retek, it was just a matter of timing.
SAP made an offer for Retek of $8.50-per-share a little over a week ago, saying it would drive SAP’s growth in packaged applications aimed at the retail vertical. It remains to be seen whether the German company will boost its offer, spurring a bidding war.
I guess we’re going to have to wait and see how they react, Ellison said, playing his cards close to his chest when asked about SAP’s likely response. It’s anyone’s guess what they’re going to do and how they react.
The market looks like it expects the bids to rise. Retek’s share price leapt 15% in after hours trading yesterday, reaching $9.95 per share, almost a dollar more than Oracle is offering.
Oracle said it has already bought 10% of Retek’s shares, 5.5 million of them, on the open market in the last few days. This, if anything, already gives it a card to play should the competition for Retek get nastier.
But Oracle says this offer is very different from the long-running PeopleSoft saga. Ellison said he expects the proposed acquisition is a friendly, positive development likely to go down well at Retek. Retek’s board has already unanimously approved the SAP offer.
Oracle believes that its technology and Retek’s are more complementary that what SAP could offer. The companies have been partners for almost ten years, he said. There is no product overlap, he said, but both sets of products are built on the same platform.
There is not much left for us to do with these products, Ellison said. Retek is well on the road to being Project Fusion-compatible, he said, referring to Oracle’s PeopleSoft integration plan, which takes a Java-based standards approach to software.
We have a common vision of a next generation of applications built on industry standards, Ellison said. All of Retek’s new products are being built on Java, all of Oracle’s new products are being built on Java. We think this makes us a much better technology fit.
Retek is building its new applications with Oracle’s developer environments, Oracle said. As many as 80% of Retek’s customers use an Oracle platform already, the company claims.
Despite the aggressiveness of the move, Ellison played down the financial importance, saying the deal would barely move the needle compared to PeopleSoft. However, the deal is strategically important in the longer term, he said.
This is a much simpler acquisition, Ellison said. But he declined to rule out any further M&A activity. It wouldn’t have any impact on our ability to do a larger transaction sometime in the next 12 months, he said.
