Retek Soars on Expansion of Alliance With IBM

Updated from 12:36 p.m. EDT

Shares of Retek (RETK), a maker of software for the retail sales industry, surged more than 20% Thursday after IBM (IBM) said it would take an undisclosed equity stake in the company.

The companies said they would expand an alliance begun in March to include jointly marketing a package of hardware and software intended to facilitate electronic commerce by retailers. The companies hope to generate total revenue of more than $1 billion from the alliance by 2003.

Retek ended Thursday regular trading up $9.25, or 30%, at $41.38. But they remained far below the 52-week high of $122.81.

The deal's previous terms called for a joint offering of software, hardware and services directed at the food and drug segment of the retail industry. Under its new terms, the companies will expand their offerings to additional retail segments and Armonk, N.Y.-based IBM will increase the number of professional staff members dedicated to Minneapolis-based Retek to 300 from 60.

The $1 billion figure is a "prudent and conservative" aggregate estimate of the combined revenue the companies will generate, said George Beard, spokesman for Retek. While there is not a "specific protocol" for splitting the pot, each company's share will likely be determined by its role in each sale. "We're expecting to get 25% to 30%," Beard said.

IBM finished up $2.13, or 1%, at $133.56.

>To order reprints of this article, click here: Reprints