Oracle Raises Offer for Retek, Trumping SAP

Business software makers Oracle Corp. and SAP intensified their takeover tug-of-war for retail software maker Retek Inc. on Thursday as they progressively raised the stakes with higher bids.

Redwood City, Calif.-based Oracle finished the day with the higher offer of $11.25 a share, trumping SAP’s $11-a-share bid from earlier in the day. Oracle raised the stakes even after Retek’s board unanimously accepted SAP’s offer.

Germany-based SAP first thought it had acquired Minneapolis-based Retek for $8.50 a share 2 1/2 weeks ago, but then Oracle offered $9 a share.

Based on Retek’s outstanding stock as of Feb. 25, SAP’s all-cash bid is worth $631 million, nearly two times Retek’s market value before the auction began.

Investors had been anticipating an even higher offer from Oracle.

Retek’s shares surged $1.13, or 10.7%, to $11.65 on Nasdaq, where Oracle’s shares gained 14 cents to $13.16. The U.S.-traded shares of SAP fell 2 cents to end the day at $40.25 on the New York Stock Exchange.

AMR Research analyst Bruce Richardson said he wouldn’t be surprised if SAP and Oracle swapped bids for a while longer.

If it prevails, Oracle will be on the hook for more than just the sales price. As part of its new deal with Retek, SAP raised the breakup fee to $25 million, up from $15 million previously. Retek would probably require Oracle to pay the fee.

The gamesmanship pits the world’s two leading makers of business applications software -- the computer coding that automates a wide range of administrative tasks. SAP has long been the industry leader, but Oracle closed the gap two months ago by buying PeopleSoft Inc. for $10.3 billion after a heated battle that lasted 18 months.

Oracle is still trying to cobble PeopleSoft’s operations into its own as it strives to boost its profit by at least $400 million in the fiscal year ending in May 2006. That formidable task has caused some analysts to question the wisdom of pursuing another deal.

It also doesn’t help matters that Oracle late Thursday announced the unexpected departure of its chief financial officer, Harry You.

But Oracle management believes Retek can be easily digested because it’s so small. With just $174 million in annual revenue and 525 employees, Retek is a niche player in the industry.

Nevertheless, the company holds tremendous appeal for both SAP and Oracle because its 200 customers are retailers -- a group that hasn’t bought as much business applications software as many other industries.