Oracle is buying Siebel for $5.85 billion - or $10.66 a share.

"In a single step, Oracle becomes the number one CRM applications company in the world," said Oracle CEO Larry Ellison. "Siebel's 4,000 applications customers and 3,400,000 CRM users strengthen our number one position in applications in North America and move us closer to the number one position in applications globally."

Siebel's chairman was equally glowing: "Today is a great day for Siebel Systems' customers, partners, shareholders, and employees," said Thomas M. Siebel. "The combination of Siebel applications with the development capacity of Oracle to enhance our CRM product set assures our customers continuing success. This is a very beneficial business combination that will allow us to be even more effective in delivering high quality, leading edge solutions into the hands of satisfied customers."

Siebel's board of directors has voted in favour of the purchase, and Siebel stockholders will convene in a special meeting to vote on the acquisition. Oracle stockholder approval is not required.

A press conference on the buy is being held later today.