Oracle to buy Siebel Systems in $5.85 billion deal

Oracle Corp. has agreed to acquire business applications vendor Siebel Systems Inc. in a deal valued at approximately US$5.85 billion, or a net value of $3.61 billion taking into account Siebel’s cash reserves, the companies announced Monday.

The deal marks Oracle’s latest step in its bid to remake itself as a global business applications powerhouse, following the closure of its $10.3 billion acquisition of PeopleSoft Inc. at the start of the year.

In contrast to its hostile PeopleSoft takeover, Siebel’s management appears to be behind the deal. Chairman Thomas Siebel, along with the rest of the Siebel board, have agreed to vote in favor of the deal, Oracle said in a statement. Siebel’s stockholders will hold a special meeting to decide whether to approve the deal. Oracle does not need the approval of its own stockholders to go ahead with the takeover, it said.

The companies expect the deal to close early next year, subject to regulatory approvals. Oracle was forced to battle the U.S. Department of Justice over its PeopleSoft merger, due to complaints that the deal would be anticompetitive.

Buying Siebel would make Oracle the world’s largest vendor of customer relationship management (CRM) software, Oracle said, bringing it 4,000 customers and 3.4 million individual CRM software seats.

Oracle agreed to pay $10.66 per share for the company, more than a 10 per cent premium over Siebel’s closing stock price Friday of $9.13 per share. The total value of the proposed deal is $5.85 billion, but Oracle will effectively pay $3.61 billion given Siebel’s cash on hand of $2.24 billion.

The companies’ joint customers have recommended the tie-up, Oracle said. Many Siebel implementations run on Oracle’s database software.