Last week, I wrote about SAP's
Well, that is, until yesterday. Oracle
"We intend to defend our number one position" (for business applications in North America), Ellison wrote in a letter to Retek's board of directors. In corporate America parlance, that's the equivalent of declaring war.
SAP's deal was priced at $8.50. Oracle launched a hostile bid for $9 per share. It was a nice surprise for Retek shareholders -- who were already looking at a 42% premium on the SAP bid. The market, however, is expecting even more fireworks, having currently driven the stock to just under $10.50 per share.
In the tech world, hostile takeovers are a rare occurrence. As for Ellison, he is battle tested, having been successful on a $10.5 billion hostile takeover of PeopleSoft.
Oracle wasted little time. In the past week, it purchased 5.5 million shares -- 10% of the outstanding shares of Retek -- in anticipation of its hostile bid.
Retek is a leader in developing software for retailers, such as Best Buy
Moreover, retail is becoming much more complex, which is leading the industry to automated solutions. Trends include multiple-store formats, in which diverse products are sold; multiple channels, such as integrating e-commerce; and new technologies, like RFID.
The Oracle brand should be a big boost for sales, and it brings an existing 800-customer base.
Last October, Oracle was in discussions to buy Retek, but had to hold off because of integration efforts on PeopleSoft. SAP saw this as a way to capitalize on the situation and moved on Retek. Given the enmity between SAP and Oracle, SAP may up the bid on the deal to make it more costly.
Will the Retek transaction slow Oracle's M&A drive? Not according to Ellison. He indicated on the conference call that Retek is a "tiny deal," and that we can expect a big deal within the next 12 months. So far, Ellison has been very clear about his intentions.
Fool contributor Tom Taulli does not own shares mentioned in this article.
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