A battle for retail software maker Retek ignited on Thursday when Oracle trumped SAP's $US496 million offer for the firm. Up for grabs is Retek's retail industry expertise and credibility with retail companies — something Oracle needs more than SAP, analysts say.
Oracle offered $US9 per share for Retek, while SAP a week earlier agreed to pay $8.50 per share. Retek sells a broad range of retail-focused applications, including software for operations management, supply chain planning, merchandising and demand forecasting.
SAP has decent retail applications already and acquiring Retek would give it long-term dominance in the enterprise retail software market, says Scott Langdoc, a vice president at AMR Research Oracle, on the other hand, doesn't have a cohesive retail applications strategy and can't afford to let the gap with SAP widen, Langdoc says.
Oracle's offer caps a deal that has been several months in the making, according to executives. The two companies began discussions last autumn, but Oracle put its Retek efforts on hold during its pursuit of PeopleSoft. "We were a bit distracted with the PeopleSoft integration process. When SAP made their bid, we decided to counter," Oracle chief executive Larry Ellison said in a conference call with analysts.
An Oracle purchase of Retek would be less disruptive to customers than an SAP purchase, particularly since there's little or no product overlap between the Retek and Oracle application suites, says Paula Rosenblum, director of retail research at Aberdeen Group. However, Oracle already is focused on integrating PeopleSoft and JD Edwards, which means an Oracle purchase isn't likely to alleviate any of the challenges Retek users face today, such as expensive application installations and difficult upgrades, Rosenblum says.
While an Oracle win would provide a cleaner integration path, an SAP win would create a broader footprint and global reach by combining the two companies' current product development and sales assets, according to AMR Research.
AMR's Langdoc doesn't expect SAP to cave in without a fight, though it hasn't so far mentioned any counteroffer plans. For Retek, the problem with a prolonged fight is that it's already in a tough situation financially and operationally, and the bidding saga has all but halted its sales cycles, Langdoc says.