Oracle to Enter Bidding War With SAP for Retek
Oracle Corp. said Tuesday that it planned to make a $504-million takeover offer for Retek Inc., sparking a bidding war with larger competitor SAP. Retek shares surged 17% on the news.
Oracle, the world’s No. 2 maker of business-management software, bought 10% of Retek this week and said it would begin a $9-a-share tender offer today. Germany’s SAP on Feb. 28 offered $8.50 a share for Retek, a Minneapolis-based maker of software for retail companies.
The contest for control of Retek pits Oracle Chief Executive Larry Ellison against the firm’s major competitor three months after he won an 18-month hostile takeover battle for smaller rival PeopleSoft Inc. Ellison endured the fight to shore up Oracle’s position against SAP. Adding Retek would give the victor greater access to the retail industry, in which companies are increasing the use of software to help run their business.
“We certainly think it’s a much better value for Retek shareholders,” Ellison said during a conference call with analysts. Oracle will “defend our No. 1 position” in the U.S., he said.
SAP spokesman Bryan Nella declined to comment. Retek spokesman Al Galgano did not return a call seeking comment.
Retek shares jumped $1.36 to $9.95 in extended trading. In Tuesday’s regular trading on Nasdaq, the shares closed at $8.59, down 30 cents. The stock was trading at $6 before SAP made its offer Monday.
Oracle shares fell 11 cents to $13.51 in extended trading Tuesday after closing at $13.62, up 2 cents, in regular Nasdaq trading.
Oracle’s purchase of PeopleSoft for $10.3 billion in December made it the No. 2 company behind SAP in the $22-billion market for programs to run business tasks such as payroll and human resources. Oracle and Retek have been in discussions since last year, Ellison said during the conference call.
“This will be a much simpler transaction” than the PeopleSoft deal and “wouldn’t have any impact on Oracle’s ability to do another transaction in the next 12 months,” Ellison said.
SAP CEO Henning Kagermann said Feb. 28 that the retail industry represented “a significant growth opportunity” for his company. SAP got its bid in first because Oracle was distracted by the PeopleSoft acquisition, Ellison said.
About 80% of Retek’s customers run Oracle’s software. The companies have worked together since 1986, Oracle said.
Customers have told Oracle that they would be happier with an Oracle takeover than an SAP takeover, Ellison said.
