SAP walks away from Retek deal

Oracle has just announced that it has reached agreement to acquire Retek for $631M. Retek is a leading vendor of retail management systems. SAP, which made the initial offer of $8.50 for Retek, refused to respond to Oracle's latest offer of $11.25 per share.

I predicted last week that if Oracle countered, SAP would walk.

There's more detail in a press release on Oracle's web site.

Update, Mar. 22. SAP isn't exactly walking away empty handed. SAP had negotiated a $25 million termination fee if Retek cancelled the deal. According to an article in CNET this morning, SAP plans to "take that termination fee and reinvest it in its retail strategy." So, in effect, Oracle helping to fund SAP's retail applications development effort, or contributing $25M toward SAP's next acquisition.

Who might SAP go after instead of Retek? Keep watching JDA, a main competitor to Retek. A JDA acquisition might be particularly apt, seeing that JDA is a partner to PeopleSoft, which could mean SAP would be gaining a foothold in some Oracle clients.

Forbes has a more in-depth analysis of the battle between SAP and Oracle in the retail market space.

Update, Mar. 28. Bruce Richardson at AMR thinks that Oracle overpaid for Retek.

Price aside, Retek is strategic to Oracle because of the pull-through effect. Most Retek customers use Oracle’s database and run the financial and human resources software. Plus, Oracle didn’t want SAP to box it out of the retail market. Did SAP’s counterbid cause Oracle to pay too much? In my view, yes.

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