Oracle Bids Against SAP for Retek

By Renee Boucher Ferguson  |  Posted 2005-03-08

Oracle Bids Against SAP for Retek

Just when it seemed like the ERP (enterprise resource planning) market was calming down after Oracle Corp.s successful coup of PeopleSoft Inc., Oracle is at it again.

The company announced late Tuesday afternoon its intent to acquire, for $9 a share, retail software developer Retek Inc.—a company that SAP AG announced last week it would acquire for $8.50 a share, or about $496 million in cash.

Oracle officials said the company has been in discussions with Retek since last October and had planned to acquire the company at some point, but became distracted with the PeopleSoft acquisition.

SAP officials were not available for comment.

Retek, based in Minneapolis, Minn., is largely considered the leader in its industry.

The company develops software that enables automation from the point of purchase through the retail supply chain, and supports retailer activities such as merchandise operations management, supply chain management and merchandise planning and optimization.

Once SAP announced its intent to acquire Retek on Feb. 28—a sale that was expected to be complete in April based on shareholder and regulatory approvals—Oracle started buying the companys stock.

To date, it has acquired 5.5 million shares, or 10 percent of Reteks shares.

"We evaluated SAPs bid to acquire Retek carefully ever since it became public and we decided we were going to make a bid," said Oracle CEO Larry Ellison during a press conference held Tuesday.

"We are the largest [vendor in North America], and we intend to defend that. We have over 2,300 users in North America—quite a bit larger than SAPs—and we think its important to defend that position."

Read more here about Ellison telling SAP to watch its step in its competitive techniques.

Ellison said Oracles acquisition of Retek makes sense because the two companies have been partners for over a decade and have many customers in common.

Next Page: Oracles past with Retek.

Oracles past with Retek

At the same time, the two companies have a common technology base.

Most of Reteks applications are built on Oracles technology platform, using Oracle Forms.

At the same time, Reteks latest software suite, Retek XI, has been recently re-architected and based on open forms and Java, a technology standard approach Retek shares not only with Oracle, but with SAP as well, to some degree.

SAPs earlier applications are developed using the companys proprietary ABAP programming language.

Over the past several years, SAP has opened up its application server to encompass Java as well, enabling programmers to develop newer applications in either ABAP or Java.

Should Oracle succeed in acquiring Retek, it would be essentially be a two-for-one deal, according to Joshua Greenbaum, principle of Enterprise Applications Consulting in Berkeley, Calif.

"Oracle gets to take a shot at two competitors at once—obviously SAP, but IBM as well," said Greenbaum. "[Retek and IBM] are long established partners; there is a long connection there. Taking Retek away from SAP also means taking them away from IBM."

Click here to read more about SAP Americas plans to acquire Retek.

In a letter to Reteks board of directors, Ellison put forth the same terms to acquire Retek as those put forth by SAP. That merger agreement is not publicly filed.

At this point, not even Oracle is sure what the next steps will be, Ellison said.

"Weve had a lot of discussions at our own board," said Ellison, in Redwood Shores, Calif. "Will SAP walk away? Will there be an auction [for Retek]? We dont know. Its late at night in Germany, where these decisions are made.

"Its anybodys guess what [SAPs] going to do and how theyre going to react. We will evaluate our next move once we know what theirs is."

SAP is based in Walldorf, Germany.

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