Oracle Boosts Retek Offer - TheStreet

Life has improved some more for




The bidding war for the retail-industry software maker intensified Thursday, as Germany's


(SAP) - Get Report

and database giant Oracle took turns ratcheting up their offers.

SAP struck first, pushing its offer up by 29% to $11 a share, or $617 million. Retek told shareholders to take the money, but investors were betting that Oracle would take the bait and raise its own bid. They were right.

Hours after the market closed, Oracle countered with a bid of $11.25 a share.

At the end of the day, shares of Retek had gained $1.13, or 10.7%, to $11.65. They fell back a dime in premarket trading Friday to $11.55.

SAP started the M&A tussle with a of $8.50 a share in early March. Oracle quickly countered with a $9-a-share bid, and SAP came back Thursday with its "best and final offer" of $11 a share.

"We believe that SAP's offer is a good deal for Retek stockholders, and our board of directors has unanimously recommended that it be accepted," Retek Chief Executive Marty Leestma said in a press release Thursday.

Oracle had no immediate comment on SAP's move, but Wall Street was betting that another offer is likely before SAP's bid expires on April 1.

While ego is one factor in the battle, Richard Williams, chief software analyst for Garban Institutional Equities, says the takeover struggle is more about Oracle and SAP fighting to add capabilities and customers to their portfolios.

Retek specializes in software that helps retail companies to perform numerous activities including inventory and order management, point-of-sales operations and more -- areas that SAP, the world's largest seller of enterprise business applications, has attempted to enter several times with only limited success.

Although investors were euphoric Thursday, there was some concern that Oracle might be tempted to overpay for Retek. "Oracle's dogged pursuit of PeopleSoft seems to indicate that Oracle management is fairly price-insensitive when it comes to completing mergers that they view as strategic," said Sanford Bernstein analyst Charles Di Bona, whose company doesn't have an investment-banking relationship with Oracle.

Di Bona has castigated Oracle in the past for its "lack of discipline. "Such apprehensions about Oracle's stewardship of shareholder resources could drag on Oracle's share price in coming months as the market reassess the outlook for Oracle's future uses of capital," he said in a note to clients.