Users Unfazed by Oracle's Retek Deal

$630M acquisition just fills a void in its product line

Oracle Corp., still working to digest its recent acquisition of former ERP rival PeopleSoft Inc., now faces the prospect of merging with retail software maker Retek Inc.

Oracle's $630 million offer last week beat out SAP AG's offer by $14 million in a bidding war for Minneapolis-based Retek. Oracle officials say the company intends to use the Retek acquisition to establish itself quickly in the retail applications business.

Oracle users interviewed last week expressed few concerns about the deal.

Fred Pond, director of information services at Schnitzer Steel Industries Inc. in Portland, Ore., expressed some unease that the Retek purchase has "to be stressing" for Oracle, but he concluded that "I don't really have any opinion other than it shows that Oracle continues to be the king of mergers and acquisitions."

Schnitzer uses J.D. Edwards & Co. applications that Oracle gained in the PeopleSoft deal.

Rounding Out Retail

While short on details about plans for the merger, a Retek spokesman said that there is very little overlap in the product lines of the two companies and that Oracle is looking to exploit the retail specialist's expertise. "This really is filling a void for Oracle," he said.

Oracle officials wouldn't comment last week, but in a March 8 letter to the Retek board of directors, Oracle CEO Larry Ellison contended that 80% of Retek customers run Oracle software. He also said that Oracle has "already put extensive thought into our integration and joint product road map," and that "Retek's existing products will simply become part of the Oracle E-Business Suite."

SAP officials downplayed Oracle's victory in the battle for Retek. In a statement ceding Retek to Oracle, CEO Henning Kagermann said that his company has 2,400 customers in the retail industry and can thus "meet any competitive challenge in this market segment."

Despite the fact that Retek twice endorsed acquisition bids from SAP in the past month, the Retek spokesman said users shouldn't be surprised by the result. "We're the type of organization joined at the hip with our clients, and [we] have made them fully aware of what's been going on," he said.

Gary Riley, another user of Oracle's J.D. Edwards software, was upbeat about the Retek deal.

Riley, business systems analyst at Palmer, Alaska-based Matanuska Telephone Association Inc., said he has found that the challenges around the PeopleSoft merger are energizing Oracle. The Retek buyout is another "key component" to help the company succeed, he said.

Overall, the PeopleSoft merger is moving along well, Riley added. "As customers, we just need to be heard, and Oracle is opening up those lines of communication for us all to be better served," he said.

The Retek spokesman said he expects a road map for the Retek products to be available over the next few weeks from Oracle.


Oracle Buys Retek

THE PRICE: $630 million

WHAT IT MEANS: Oracle gains access to Retek’s retail-oriented supply chain, merchandising and demand planning applications.

ORACLE INHERITS: 200-plus customers in 20 countries and 525 employees

RETEK'S 2004 REVENUE: $174 million

Copyright © 2005 IDG Communications, Inc.

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