Oracle rings up win for Retek

Oracle Corp. last month won the bidding war against German software rival SAP AG to acquire retail management software developer Retek Inc. Oracle and Retek have signed a definitive merger agreement that will see Oracle acquire the Minneapolis company for US$630 million. SAP confirmed separately that it has dropped out of the bidding, saying it chose to exercise “financial discipline.”

The bidding war had been closely watched, thanks to the rivalry between SAP, the world’s largest business applications vendor, and Oracle, which became number two in the market in January when it completed its hostile takeover of PeopleSoft Inc.

Retek sells a variety of retail-focused applications, including software for operations management, supply chain planning, merchandising and demand forecasting. The acquisition strengthens Oracle’s footing in the retail applications business, where it was not seen as a particularly strong player.

The Redwood Shores, Calif. company was also keen to buy Retek to keep its lead over SAP in the North American market, where it has more customers, Oracle CEO Larry Ellison said in a conference call last month.

Oracle had already been in talks to buy Retek earlier in the year, Ellison said, but was too distracted by the fight over PeopleSoft to make a deal. Nearly 80 per cent of Retek’s customers run their applications on Oracle’s database, Oracle said. Marty Leestma, Retek’s president and CEO, said the company will work with Oracle over the coming weeks to avoid disruption for Retek’s customers.

Dave Rumer, senior director, marketing for Mississauga, Ont.-based Oracle Corporation Canada, said the combination of Retek and Oracle will produce a number of benefits for Oracle’s Canadian customers. Oracle also intends, Rumer said, to provide customers and partners with a clear product roadmap on Oracle-Retek technology.

Bob Courteau, president for SAP Canada Inc. in Toronto, told ComputerWorld Canada that regardless of Oracle’s win, the Canadian retail industry is one that SAP will continue to focus on.

The retail industry remains strategically important to SAP, which has 2,400 retail customers, according to SAP. But it was not prepared to take part in a battle that would have driven Retek’s price unreasonably high, it said.

Currently in the lucrative retail industry, the biggest issues are around merchandizing and inventory management, Courteau said. Retailers are looking to migrate from aging legacy applications to new technology and SAP seeks to capitalize on that, Courteau said.

In fact, Retek was more important to Oracle than to SAP, which already has quite a strong set of retail offerings, according to David Bradshaw, principal analyst with Ovum Ltd. in London. “SAP will not be altogether disappointed, because it forced Oracle to pay a very high price,” Bradshaw said.

with files from Ryan B. Patrick

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