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Oracle Woos, SAP Waits For Retek

The heat is on for software provider Retek to make a decision about the future of its business.

The Minnesota-based company is in the unlikely position of having the top two ERP market leaders SAP and Oracle fawn over its $174 million in annual revenue and products that serve the retail industry. SAP's initial $496 million offer in February was accepted by Retek but quickly countered by Oracle's $525 million bid this week.

Both suitors are sweetening their deals with promises of more local jobs, improved technology, better quality service and additional R&D investment.

For example, SAP CEO Henning Kagermann said his company would create 600 new jobs in Germany this year and invest as much as $133.8 million for a new plant in Germany if Retek finalized the deal.

"Retek now has to get in touch with us," Kagermann told the Associated Press during a session at the CeBit trade show in Germany. The executive declined to say whether SAP would raise the stakes any time soon to outbid Oracle's offer.

SAP has said it would use the acquisition to build up its SAP for Retail platform, a continuation of the company's strategy to expand its software portfolio through acquisitions.

But Oracle has been down this road before and one only needs to look at its purchase of PeopleSoft this year to see how far the company would go to get what it wants.

In familiar fashion, Oracle president Charles Phillips sent an open letter to Retek late Thursday saying that the database software giant has a product roadmap based on Oracle-Retek technology in mind and that it would continue to support relationships with Retek's existing partners.

"Because there is no overlap between Oracle and Retek products, Retek customers will experience far more continuity with an Oracle combination," Phillips said in his letter. "We understand how quickly your industry is moving, driven by consolidation and competition, and amid the host of changes under way, we remain firmly committed to the retail industry."

Retek specializes in software and services for the retail industry, such as merchandise operations management, store and multi-channel retailing, supply chain planning and optimization and demand planning. In October 2004, the company released an integrated software suite called Retek Xi to integrate that software under one platform.

Previously, Retek built most of its software applications on Oracle JDeveloper platform. But the company has said it worked the past three or four years to move itself off the Oracle platform and onto an open standards base more suited to NetWeaver, SAP's own development platform.