Oracle Contests SAP’s Offer for Retek

''The vast majority of Retek customers already have a strong Oracle relationship,'' according to Larry Ellison.
Stephen TaubMarch 10, 2005

Oracle Corp. has made a hostile offer to acquire retail-management software maker Retek Inc., which has already agreed to a merger with SAP, the world’s largest maker of business applications software.

Oracle offered $9 per share, or $525 million, for Minneapolis-based Retek, topping SAP’s offer by 50 cents per share. Retek’s stock surged more than 22 percent Wednesday, to around $10.50 per share, suggesting that its ultimate buyer will have to raise its price.

On Monday and Tuesday, according to the database giant, it purchased 5.5 million shares of Retek common stock, representing nearly 10 percent of total shares outstanding. Laying out its case for the deal, an Oracle press release stated that the Redwood City, California-based company has partnered with Retek since 1986, providing systems to many of the world’s largest retailers. Last October, added the release, Oracle and Retek began discussions about combining the two companies.

Oracle asserted that most of Retek’s applications have been built on Oracle’s technology platform using Oracle’s development tools, and that approximately 80 percent of Retek’s customers currently run Oracle’s infrastructure software. “Oracle and Retek share a vision of the future based on the Java language and other industry standards,” noted the press release.

Oracle president Charles Phillips insisted that Retek customers he has talked to said they’d prefer that Oracle buy the company. “The vast majority of Retek customers already have a strong Oracle relationship,” he added in a statement. Added chief executive officer Larry Ellison, “Oracle’s applications business in North America is larger than SAP’s…. “We intend to defend our number one position.”

From its headquarters in Walldorf, Germany, SAP fired off a press release on Wednesday, asserting: “SAP is in a better position to offer Retek and SAP customers a swift and painless path to the integration of these and other third-party applications. SAP believes that integration at the applications level — rather than at the database level — is what will drive competitive advantage for companies looking to align their IT infrastructure in order to respond swiftly to changes in the fast-moving retail market.”

Oracle’s bid for Retek evokes memories of its bitter, 18-month effort that eventually culminated in the acquisition of PeopleSoft. According to the Associated Press, since Oracle completed that takeover two months ago, Ellison has been irked that SAP is wooing customers who are spooked by the changes.