Oracle outbids SAP to secure Retek
Oracle outbids SAP to secure Retek
Mar 23, 2005: Oracle has prevailed in its tussle with SAP to acquire Retek, having announced that it has signed a definitive agreement to acquire retail software provider at a price of US$11.25 for each outstanding Retek share – 25 cents a share more than SAP's last offer.
"We believe that Oracle's offer is a good deal for Retek stockholders, and all directors in attendance at our board meeting have recommended that it be accepted," said Marty Leestma, president and CEO of Retek. "We will work with Oracle over the next several weeks to ensure that the integration is not disruptive for our clients and employees."
SAP's statement last week that its $11 a share offer was its best and final offer has proved to be correct, although industry observers were sceptical at the time as to whether that would indeed be the case, given the number of times companies have made similar statements in recent months only to subsequently up their offer, most notably Oracle in its long struggle to acquire PeopleSoft. It would seem that either SAP's word counts for a little more, or simply that Retek was just that bit more important strategically to Oracle than to SAP.
According to SAP CEO, Henning Kagermann, the primary reason for SAP pulling out of the bidding was that it felt it had already offered a top price for the business and could not justify increasing its bid in terms of the returns the acquisition would provide.
"The retail industry remains strategically important to SAP. As a disciplined investor, SAP established a premium price for this niche business. However, we concluded that neither our shareholders nor retail customers would benefit from an auction process that would further inflate the purchase price, and in the long run, not deliver the returns we demand."
Kagermann also sounded a note of defiance, adding that: "With 2,400 customers in the retail industry, we are the leading solution provider to the retail industry, and we will successfully meet any competitive challenge in this market segment."
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