One week after SAP agreed to buy retail software maker Retek, Oracle jammed a wrench in the works, announcing plans to outbid its rival.
Oracle CEO Larry Ellison sent a letter to Retek's board of directors saying that Oracle would offer US$9 cash per share for all outstanding shares of Retek. SAP had previously made a cash tender offer of $8.50 per share, a deal SAP valued at $496 million.
"We evaluated SAP's bid to buy Retek carefully ever since it became public ... partially to defend our number one position in North America," said Ellison. Ellison said that Oracle had 23,000 North American customers, which he characterised as "quite a bit more than SAP."
Oracle has been in discussions with the retail software company since March of last year, but was unable to come up with a deal because of its ongoing acquisition of business application vendor PeopleSoft, Ellison said. "We were a bit distracted with the PeopleSoft integration process," he said. "When SAP made their bid, we decided to counter."
Should Oracle's Retek bid be accepted, it is unlikely to resemble the rancorous and complex PeopleSoft buy-out, Ellison said.
For one thing, the scope of the $524 million acquisition is much smaller than PeopleSoft, which was purchased for $10.3 billion in January. For another, Oracle and Retek do not have the product and personnel overlap that characterised the PeopleSoft acquisition.
"It's not another code base. There is no overlap in products. These are supplementary products written in Java," he said. "We think it's friendly for the employees, and it's certainly more value for the Retek shareholders. ...I think they're probably pretty happy up at Retek headquarters."
A spokeswoman for SAP said the company was evaluating the situation and could not comment. A Retek representative was not available for comment.
SAP said last week that buying Retek would help it offer a comprehensive software system that extends from point of sale through the entire retail supply chain. The deal had been approved by Retek's board of directors, and was expected to close in early April, pending regulatory approval.
Oracle has already purchased 10 percent of Retek's outstanding shares in the past two days. The company said that it would add Retek's products to Oracle's E-Business Suite portfolio.
Prior to Oracle's offer, Retek shares ended Tuesday trading on the Nasdaq exchange at $8.59. Before SAP's offer on 28 February, Retek shares closed in their previous trading session at $6.00.