Oracle has won its bidding war against German software rival SAP to acquire retail management software developer Retek.
Oracle and Retek had signed a definitive merger agreement that would see Oracle acquire the Minneapolis company for $US11.25 per share, Oracle said, equivalent to about $US630 million.
SAP confirmed separately that it haddropped out of the bidding, and said 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.
Retek sells a variety of retail-focused applications, including software for operations management, supply chain planning, merchandising and demand forecasting. It has about 550 employees and reported a profit of $US8.2 million for 2004, on revenue of $US174.2 million.
The acquisition strengthens Oracle's footing in the retail applications business, where it was not seen as a particularly strong player.
The company was also keen to buy Retek in order to keep its lead over SAP in the North American market, where it has more customers, Chief Executive Officer (CEO), Larry Ellison, said earlier this month.
The retail industry remains strategically important to SAP, which has 2400 retail customers, the German company said. But it was not prepared to take part in a battle that would have driven Retek's price unreasonably high.
"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," SAP's CEO, Henning Kagermann, said.
In fact, Retek was more important to Oracle than to SAP, which already has quite a strong set of retail offerings, according to principal analyst with Ovum, David Bradshaw.
"SAP will not be altogether disappointed, because it forced Oracle to pay a very high price. Most pleased of all will be Retek shareholders, who have seen the value of their shareholding nearly doubled in a month," he wrote in a commentary about the deal.
SAP was first to bid for Retek late last month, offering $US8.50 per share. Oracle countered a week later with an offer of $US9 per share. SAP then made what it said would be its final bid, offering $US11 per share. Oracle has now trumped that with $US11.25 per share, apparently ending the battle.
Oracle had already been in talks to buy Retek earlier in the year, Ellison said earlier this month, but was too distracted by the fight over PeopleSoft to make a deal.
Nearly 80 per cent of Retek's customers ran their applications on Oracle's database, Oracle said.
Retek's president and CEO, Marty Leestma, called Oracle's offer a good deal for Retek's shareholders.
The company would work with Oracle over the coming weeks to avoid disruption for Retek's customers, he said.
Oracle said last week that its purchase had received early clearance from US regulators.