Oracle seeks to pre-empt SAP offer for retailer

Post PeopleSoft Oracle gets the munchies, goes after Retek

Three months after acquiring PeopleSoft, Oracle is on the acquisition trail again.

This time, it has retail systems specialist Retek in its sights, and is seeking to overturn a deal Retek struck at the end of February with SAP, in which SAP would buy Retek for $US496 million.

Oracle's offer for Retek tops that - it's offering US$9 a share, or US$525 million.

SAP announced on February 28 that it had signed an agreement to buy Retek and that the deal was expected to close in April.

Oracle responded by buying 5.5 million Retek shares the following Monday and Tuesday, a stake of nearly 10% - and sending a letter to Retek's board with the $525 million cash offer.

When Computerworld went to press last week, the only response from SAP had been an announcement, reported on The Register, that "SAP has no further comment at this time."

Oracle president Charles Phillips told Computerworld sister publication Network World that PeopleSoft had held talks with Retek, beginning last September and Oracle chief executive Larry Ellison said "we were talking to Retek at the same time SAP was [but] we were a bit distracted with the PeopleSoft integration process.

"When SAP made their bid, we decided to counter."

The motivation behind SAP's offer and Oracle's counter-offer is getting a slice of the retail applications space.

Analyst firm Gartner notes in a research paper "with this agreement, SAP obtains Retek's customer base and its high level of credibility and brand recognition in the retail sector.

"The two vendors' products were positioned head-to-head."

The Gartner report goes on to say "the proposed deal is good news for SAP retail customers, but poses challenges for those Retek customers who have no desire to adopt SAP.

"Thus far, SAP has not made clear what IP from the Retek products will be embedded into SAP's core retail application architecture."

The report, written before Oracle's counter-offer, hinted that Oracle would have a problem with SAP buying Retek: "Oracle is faced with risking a bidding war for Retek, finding another partner or giving up on having a serious retail strategy."

Oracle and Retek are longstanding partners, and in his letter to the Retek board, Ellison noted "most Retek applications have been developed using Oracle's development tools [and] unlike SAP, we share a vision of the future with applications built in Java and based on industry standards."

Retek doesn't have a large presence in New Zealand, but users include clothing retailer Country Road. The now-defunct clothing chain Dress for Less was also a customer.

In Australia, retail giant Coles Myer is a significant Retek customer.

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