SAP's Retail Buy A Surprise

"It was the worst-kept secret since at least last April that Oracle wanted to buy Retek," said AMR Research's Scott Langdoc. "But the reality is, at the time Retek was not only ready but needed to be bought because of its financials, Oracle was distracted with PeopleSoft."

Instead SAP, Walldorf, Germany, gave Retek an offer it couldn't refuse: $8.50 per share for an all-cash transaction worth $456 million, a 42 percent premium over Retek's share price the day before SAP's offer.

Now the market is holding its breath to see how Oracle will react. The Redwood Shores, Calif., company could do nothing, of course. Or it could acquire a different retail vendor. Here, most signs point to Tomax, of which Oracle already owns a minority stake.

"Whenever I've heard about retail from Oracle, they talk about Tomax," said Ron Zapar, CEO of Re-Quest, Naperville, Ill.

Or Oracle could counter SAP's offer. "I believe SAP got a bargain. I could definitely see Oracle countering SAP's offering. If they're serious, that should happen in the next week or so," said Yun Kim, software analyst at A.G. Edwards.

Oracle declined to comment on the acquisition of Minneapolis-based Retek.

Still, most observers believe Oracle must do something because it has no retail applications offering. In contrast, SAP has made strong retail inroads. That $456 million investment buys SAP a number of complementary products, including Retek's POS and store management applications.

"SAP was taking market share away from Retek and others," said Jim McMurray, senior vice president of retail for SAP America. "But retail is a fragmented market. To the extent that we can combine both our companies and gain additional leverage against others, this makes sense. We did not buy [Retek] because we thought someone else would beat us to it."