Virtually 80% of Retek customers run on an Oracle platform. Larry Ellison CEO, Oracle Corp.

Oracle is prepared to play the waiting game as the battle with SAP AG for retail applications company Retek Inc. begins to heat up.

During a press conference Wednesday, Oracle president Charles Phillips said that if the Retek board approves his company's purchase offer, SAP would be required to respond within three business days due to an existing agreement between SAP and Retek called a "look back clause."

Retek, a Minneapolis, Minn.-based retail applications company became a hot-button topic this week after SAP's initial offer to buy a controlling share of the firm for $8.50 per share, or $496 million, was topped by Oracle's bid to buy the company at $9 per share.

Retek has about 200 customers in more than 20 countries around the world. Its 2004 annual revenue was $174.2 million. The company's 525 employees are based in offices in Atlanta, London and Melbourne, Australia. Both SAP and Oracle view Retek as key to increasing their presence in the worldwide Enterprise Resource Planning (ERP) applications market.

On Tuesday, Oracle CEO Larry Ellison, said his company's bid for Retek was designed to defend its number one position the North American market for enterprise applications.

"Retek applications are complementary to Oracle products, and unlike the PeopleSoft acquisition there is no overlap," Ellison said. "Almost all Retek technologies are being built on the Oracle platform."

Ellison said the fact that new products from Retek and Oracle were both being built on the Java platform, making Oracle a "much better fit" for Retek than SAP.

"Virtually 80% of Retek customers run on an Oracle platform," Ellison said.

Why retail? Why now?

Both Ellison and Phillips said that the driving force behind the Retek acquisition bid is a desire to take away ERP market share from SAP, which holds the number one in that market worldwide. But, to hear Ellison speak, one wouldn't think that was the case.

"The retail market is a place where we are stronger than SAP," Ellison said. "With Retek we will be able to pursue [that market] more aggressively."

Phillips said that Oracle had been in discussions with Retek about a future acquisition since September 2004. He said an integration plan has already been created and that he has repeatedly met with Retek management to discuss those plans.

Phillips said the retail market is ripe for an Oracle/Retek merger because he has seen more retailers selling through multiple channels, using Web-based call centers and using technologies like radio frequency identification.

"With the two companies together we have a footprint to cover all of these channels," Ellison said.

Appetite for acquisition still strong

If Oracle is successful in its bid for Retek, Phillips said he believed Oracle would be in a position to make significant acquisitions as soon as the summer of 2005.

"Again, this is a much smaller transaction than PeopleSoft," Phillips said, "It is much simpler this time, with no impact on our ability to do larger transactions over next 12 months."