Oracle tries to outbid SAP for Retek

IDG News Service - One week after SAP AG agreed to buy retail software maker Retek Inc., Oracle Corp. jammed a wrench in the works, announcing plans to outbid its rival.

Oracle CEO Larry Ellison sent a letter to Retek's board of directors today saying that tomorrow morning Oracle will commence a cash tender offer of $9 per share for all outstanding shares of Retek. SAP last week agreed to buy Retek through a cash tender offer of $8.50 per share, a deal SAP valued at $496 million.

"We evaluated SAP's bid to buy Retek carefully ever since it became public ... partially to defend our No. 1 position in North America," Ellison said on a conference call with analysts. He said that Oracle has 23,000 North American customers, which he characterized as "quite a bit more than SAP."

Oracle has been in discussions with the retail software company since March 2004, but was unable to come up with a deal because of its ongoing acquisition of business application vendor PeopleSoft Inc., Ellison said. "We were a bit distracted with the PeopleSoft integration process," he said. "When SAP made their bid, we decided to counter."

Should Oracle's Retek bid be accepted, it is unlikely to resemble the rancorous and complex PeopleSoft buyout, Ellison said.

For one thing, the scope of the $524 million acquisition is much smaller than PeopleSoft, which was purchased for $10.3 billion in January. For another, Oracle and Retek do not have the product and personnel overlap that characterized the PeopleSoft acquisition.

"It's not another code base. There is no overlap in products. These are supplementary products written in Java," he said. "We think it's friendly for the employees, and it's certainly more value for the Retek shareholders. ...I think they're probably pretty happy up at Retek headquarters."

A U.S. spokeswoman for Walldorf, Germany-based SAP said the company is evaluating the situation and does not yet have any comment. A Retek representative wasn't available for comment.

SAP said last week that buying Retek would help it offer a comprehensive software system that extends from point of sale through the entire retail supply chain. The deal was approved by Minneapolis-based Retek's board of directors, and was expected to close in early April, pending regulatory approval.

Oracle said today that it has purchased 10% of Retek's outstanding shares in the past two days. Oracle has already drafted joint product road maps and would add Retek's products to Oracle's E-Business Suite portfolio, Ellison said in his letter to Retek's board.

Before Oracle's offer becamepublic, Retek shares ended trading on the Nasdaq exchange at $8.59. Before SAP's offer last week, Retek shares closed in their previous trading session at $6.