Retek bidding battle – round three to SAP

SAP AG showed its determination to hold on to buyout target Retek Inc., offering a new bid of US$11 cash per share on Thursday, topping Oracle’s Corp.’s $9 per share offer.

Minneapolis-based Retek has accepted the amended offer, SAP and Retek said in a joint press release.

The new deal represents a 29 percent premium over SAP’s first offer, and an 86 percent premium on Retek’s closing share price the day before SAP announced its deal to acquire the company.

Retail management software maker Retek was caught in a tug-of-war between rivals SAP and Oracle after SAP announced a deal Feb. 28 to buy Retek for $475 million. One week later, Oracle launched its own bid of $504 million. SAP’s latest bid offers Retek shareholders $616 million.

SAP, of Walldorf, Germany, said this deal is its best and final offer for Retek. Retek’s board of directors unanimously recommended the company’s stockholders to accept the revised bid, the joint statement said. Retek had never commented on Oracle’s surprise bid.

The prize the two vendors are tussling over is a financially struggling company with a key asset: a strong presence in the retail market, a space in which Oracle has little presence and SAP has for years tried to break into, with little success. Retek sells a broad range of retail-based applications, including software for operations management, supply chain planning and execution, merchandise planning, and product demand forecasting. It has more than 200 customers in 20 countries.

Oracle executives have said they see blocking SAP’s acquisition of Retek as a key step in gaining the dominant position in the U.S. ERP (enterprise resource planning) software market. Analysts say Oracle’s interest in buying Retek was well known, before SAP jumped in with its preemptive deal.

At the Cebit trade show last week, SAP Chief Executive Officer (CEO) Henning Kagermann said the retail sector is an important growth market for SAP and one to which the company has a “high commitment.”

Oracle representatives were not immediately available for comment.

The new, amended offer has one additional change: In a sign that SAP isn’t confident Oracle won’t make another counteroffer, it arranged for the deal’s termination fee to increase from $15 million to $25 million.

SAP’s tender offer is set to expire at 12 p.m. Eastern time on April 1.