SAP Revs on the M&A Autobahn

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By almost every study, mergers are a losing game -- that is, for the buyer. In fact, the chances tend to be worse for tech deals. Yet Oracle (Nasdaq: ORCL) was brave enough to go against this history and successfully launch a hostile takeover for PeopleSoft. Recently, Symantec (Nasdaq: SYMC) took a huge leap by attempting to merge with Veritas (Nasdaq: VRTS).

Yesterday we saw another deal in the software space: SAP's (NYSE: SAP) purchase of Retek (Nasdaq: RETK). On the news, Retek's stock surged 40% to $8.41.

Founded in 1986, Retek develops software for the retail industry. The solutions help with such things as merchandise operations management, supply chain management, and demand planning. Customers include Best Buy (NYSE: BBY), Gap (NYSE: GPS), and Tesco. Last year, Retek posted revenues of $174.2 million and profits of $8.2 million. The company has more than 200 customers in more than 20 countries.

The deal is largely in response to SAP's belief that the retail industry is "entering a new phase of package software adoption." That is, retailers see information technologies as a strategic asset for differentiation and growth.

For example, roughly 60% of retailers in the U.S. have in-house IT solutions. That's not necessarily bad news for Retek: It obviously indicates IT interest on the part of retailers, many of whom may eventually migrate toward a probably more complete third-party offering. Plus, Retek's offering is scalable and can be used piecemeal -- although the ultimate result of Retek's combining with SAP will be an end-to-end solution that will help drive growth in this vertical.

Historically, SAP has bought mostly small companies. But with Oracle changing the landscape of enterprise software, SAP looks to be responding. The Retek transaction is likely to not be the last M&A deal for the German giant.

Fool contributor Tom Taulli does not own shares mentioned in this article.