ORACLE-RETEK MERGER CREATES RETAIL SOFTWARE JUGGERNAUT

Michael Garry

REDWOOD SHORES, Calif. -- The merger of Minneapolis-based Retek and Oracle here creates a large new retail software company, but some observers questioned how retailers will take to the new entity.

Database software giant Oracle and Retek, a supplier of retail applications software, announced last week that they signed a definitive merger agreement under which Oracle will acquire Retek at a price of $11.25 for each outstanding Retek share for a reported total of $670 million.

The acquisition, which ended a heated bidding war with SAP, "strengthens our position in the retail applications market globally," said Larry Ellison, Oracle's chief executive officer.

Bob Willet, chief information officer of Best Buy, a Retek customer, added, "Most Retek customers already run Oracle's financial and human resources applications, so Oracle buying Retek is a perfect fit for the retail industry." Nearly 80% of Retek's customers run their Retek applications on the Oracle database.

Greg Buzek, president, IHL Consulting, Franklin, Tenn., who tracks the retail software market, noted that while retailers who use both Oracle and Retek applications might "get more integration" of those systems, other retailers "will no longer believe that Retek is database agnostic." Besides Oracle, Retek has run on NCR's Teradata and IBM's DB2 databases, he said.

Buzek also predicted that there could be a backlash by retailers against large software entities like Oracle/Retek in favor of "smaller players that can interface to existing systems and support multiple platforms."

Food retail customers of Retek include A&P, Kroger, Tesco and Sainsbury's.