Update: Oracle to buy Siebel Systems for $5.85B

IDG News Service - Oracle Corp. has agreed to acquire business applications software vendor Siebel Systems Inc. in a deal valued at approximately $5.85 billion, or a net value of $3.61 billion taking into account Siebel's cash on hand, the companies announced today.

The deal marks Oracle's latest step in its bid to remake itself as a global business applications powerhouse, following the closure of its $10.3 billion acquisition of PeopleSoft Inc. at the start of the year.

Oracle plans to support the existing suite of Siebel products for "some time to come," said Larry Ellison, Oracle's CEO, during a conference call to discuss the deal. Oracle had been planning to include a CRM suite as part of Fusion, the company's vision for a next-generation suite of products. "Because Siebel is the leader and understands the category, it makes us building the Fusion CRM function easier and less risky," he said.

Siebel's OnDemand offering, a hosted CRM solution, was a key reason behind Oracle's interest in making the acquisition. "We think that's a very important asset and we want to preserve and invest in it," said Ellison. He expects that all features and functions in Siebel software will migrate to the OnDemand offerings.

In contrast to its hostile PeopleSoft takeover, Siebel's management is behind the deal. Chairman Thomas Siebel, along with the rest of the Siebel board, has agreed to vote in favor of the deal, Oracle said in a statement. Siebel's stockholders will hold a special meeting to decide whether to approve the deal. Oracle does not need the approval of its own stockholders to go ahead with the takeover, it said.

"It's just clear as day that this is in the best interest of our partners, customers, shareholders and employees," said Tom Siebel, chairman of Siebel Systems.

Ellison vaguely said that Siebel has agreed to continue to work with Oracle for some number of years. He didn't elaborate on how long or in what capacity.

Oracle executives expect that closing this deal and integrating Siebel into Oracle will be far simpler than the PeopleSoft acquisition. "This is drastically easier than PeopleSoft," Ellison said. That's because Siebel supports the deal and because Oracle now has the experience to digest a major acquisition. Also, PeopleSoft had just bought J.D. Edwards prior to Oracle buying PeopleSoft, adding complexity to that deal, Ellison said.

"Siebel is a much less risky transaction and we're more experienced in doing integration," he said.

Analyst Rebecca Wettemann, vice president of research at Nucleus Research, agreed. "The Oracle/Siebel integration will be

Reprinted with permission from

IDG.net
Story copyright 2009 International Data Group. All rights reserved.