SAP-Oracle fight for control of Retek intensifies
SAP-Oracle fight for control of Retek intensifies
Mar 18, 2005: SAP has raised the stakes in the battle with Oracle to acquire retail software and services provider Retek by upping its offer for all outstanding shares in the company from its initial bid of $8.50 to $11.00 per share in cash, just days after rival Oracle weighed in with a bid of $9.00 (all figures US$).
Both Oracle and SAP have worked closely with Retek for a number of years, and as such, neither wants to see the company fall under the control of its rival.
Indeed, during a customer visit to Sydney last week, when news of the opening salvos in the bidding war broke, Oracle chairman Jeff Henley said that Oracle would be prepared to go the distance with SAP to secure Retek.
Oracle has been very active this week in its pursuit of Retek shares, snapping up around 5.5 million shares in just two days, representing 10 percent of total shares outstanding.
Oracle CEO Larry Ellison has also been busy courting the Retek board. In a letter to the board, which Oracle also chose to publish on its website, Ellison wrote: we are very familiar with Retek's business and management team. We have been partners since Retek's founding in 1986, and most Retek applications have been developed using Oracle's development tools. Approximately 80 percent of Retek's customers currently run on Oracle's technology platform. Most importantly, unlike SAP, we share a vision of the future with applications built in the Java programming language and based on Industry standards."
He continued: "We have already put extensive thought into our integration and joint product roadmap. Since Oracle's products are complementary with Retek's, we will not need to rationalise duplicate product sets or customer migration paths. Retek's existing products will simply become part of the Oracle E-business Suite. As a result, we think our combination is a far more compelling value proposition for your customers, partners and employees."
Nevertheless, money talks, and SAP's improved offer has put them in the box seat, at least until Oracle makes its next move.
"We believe that SAP's offer is a good deal for Retek stockholders, and our board of directors has unanimously recommended that it be accepted," said Retek's president and CEO, Mary Leestma.
Retek provides an integrated retail application suite and best-of-breed solutions to more than 200 customers in more than 20 countries around the world. With 2004 annual revenue of $174.2 million and approximately 525 employees, Retek has its headquarters in Minneapolis, with offices in Atlanta, London and Melbourne.
Putting the case forward for SAP to be considered the preferred buyer, Leo Apotheker, president, Global Field Operations and member of the executive board of SAP, commented: "The retail industry is a strategic priority for SAP, and we have many years of experience in developing and delivering retail solutions. We have more than 2,400 retail customers including such leading brands as The Body Shop, Limited Brands and J. Crew. The combination of SAP and Retek will provide customers worldwide with a deep industry knowledge that they could not get from any other software combination."
Apotheker added: "With SAP, customers have a choice in selecting their database - customers are not locked into a single database vendor. Moreover, with our open integration platform SAP NetWeaver, we can offer our retail customers a swift and painless path to integration and with the Business Process Platform a clear and defined roadmap to the future of business software.”
Meanwhile, in the midst of all this, Oracle will have to also start looking for a new CFO, following the resignation of chief financial officer Harry You, who has departed to take up the position of CEO at IT consulting firm BearingPoint. Oracle co-president Safra Catz will perform the role until a replacement is found.
In a statement, Oracle CEO Larry Ellison wished You well in his new role, and also remarked how proud he was of the amount of Oracle executives who make it to the top job elsewhere.
"We are proud of the numerous Oracle alumni that have gone on to become CEOs of enterprise software and IT service firms. We wish Harry good fortune in his new job and look forward to partnering with him and BearingPoint for years to come."
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