Oracle Wins in Bid For Retek

Oracle Corporation won the bidding battle for retail software specialist Retek with an offer of $11.25 per share after rival SAP dropped out of the bidding competition for the Minnesota-based company.

The deal’s value is estimated to be about $630 million, based on Retek’s estimated 56 million outstanding shares, and gives Oracle an even stronger position in the retail applications market.

“Oracle has the largest applications business in North America, and we intend to expand that leadership position,” Oracle’s CEO, Larry Ellison, said in a statement.

“We believe that Oracle’s offer is a good deal for Retek stockholders, and all directors in attendance at our board meeting have recommended that it be accepted,” said Marty Leestma, President and Chief Executive Officer of Retek.

The bidding for Retek started with SAP’s initial offer of $496 million, or $8 per share in cash. Oracle then countered with a $525 million bid, or about $9 per share in early March. SAP then went to $11 per share. The merger agreement between Oracle and Retek stands at $11.25 per share.

The deal highlights the intensifying competition between Oracle and SAP, especially since Oracle won its fight to buy rival enterprise software maker PeopleSoft.

In a recent research paper published during the bidding, AMR Research said the size of the Retek deal may ultimately be tiny, but the significance would be huge.

“What will become increasingly important is whether there will be short-term deliverables to help close some of the key functionality and workflow gaps that have either kept retailers on the sidelines or created difficult implementations,” the AMR analysts said.

“They want better interfaces, more embedded analytics, tighter supplier collaboration, and transparent multi-channel execution. Retailers will not be satisfied until either company addresses these vital investment priorities by conveying a strategic roadmap and then executing it in a timely fashion.”

The two companies have been in a partnership since 1986, when Retek was founded; some 80 percent of Retek’s customer base runs their applications on Oracle’s database.