Oracle Corp.’s pending acquisition Retek Inc., a leading provider of retail industry software, is good for retailers seeking integrated enterprise software, but buyers should proceed with caution, AMR Research Scott Langdoc says.
Oracle, having emerged victorious this week in its bid to buy Retek after rival suitor SAP AG backed out, will be able to offer a retail industry-specific software application set that combines Retek’s “critical store and back-office retail execution technology with Oracle’s E-Business Suite,” Langdoc says in a report released this week, “Oracle Beats Out SAP for Retek: Now It’s About Retailers.”
Oracle and Retek said yesterday that they had signed a merger agreement under which Oracle will pay $11.25 for each outstanding share of Retek, or about $670 million. Retek did $174 million in revenue last year.
Langdoc cautions, however, that neither Oracle’s nor Retek’s software deployments always go smoothly – a concern that could be aggravated by Oracle’s ongoing efforts to merge with PeopleSoft. Retailers should put extra emphasis on software deployment methodology, and Retek would benefit from reaffirming its alliance with consultants and system integrators Accenture, Langdoc says.
Retek's products have been developed on Oracle's technology platform using Oracle's development tools, and nearly 80% of Retek's customers run their Retek applications on an Oracle database, Oracle said when announcing the acquisition.
"Oracle has the largest applications business in North America, and we intend to expand that leadership position," said Oracle CEO Larry Ellison. "Combining Oracle with Retek is an important step in that direction, and it strengthens our position in the retail applications market globally."
Retek president and CEO Marty Leestma said, "We believe that Oracle's offer is a good deal for Retek stockholders, and all directors in attendance at our board meeting have recommended that it be accepted. We will work with Oracle over the next several weeks to ensure that the integration is not disruptive for our clients and employees."
Other software vendors, including SAP, can be expected to continue expanding their offerings for the retail industry, Langdoc adds. “We expect to see some of the other enterprise vendors like JDA Software, Tomax, Lawson, GERS Retail, NSB Retail, SoftSolutions, Aldata and Retalix looking to expand their capabilities,” Langdoc says. “But don’t rule out the increasing abilities of vendors like DemandTec, NCR/Teradata, Manugistics, KhiMetrics, Evant, Mettler-Toledo/Softechnics, ProfitLogic, TCI Solutions and SAS/Marketmax, which will also be working hard to capture retailer mindshare.”
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