Tuesday, 13 June 2006

Oracle Snaps Up Rival Siebel Systems

Oracle Corporation is buying its struggling rival San Mateo-based Siebel Systems Inc. in a deal that values Siebel at USD 5.85 billion, continuing a recent shopping spree that has eliminated two of its biggest competitors as it aims to topple the industry leader, Germany's SAP AG, in the robust niche of customer management software...

Oracle Corporation is buying its struggling rival San Mateo-based Siebel Systems Inc. in a deal that values Siebel at USD 5.85 billion, continuing a recent shopping spree that has eliminated two of its biggest competitors as it aims to topple the industry leader, Germany's SAP AG, in the robust niche of customer management software. Customer relationship management (CRM) software helps companies track sales, customer service and marketing functions.

Under the terms of the deal, Redwood Shores-based Oracle will buy Siebel for USD 10.66 per share in cash or stock for San Mateo-based Siebel. The Siebel deal is expected to wrap up by early 2006.

The purchase of Siebel will give Oracle access to 3.4m users and 4,000 corporate customers of its CRM software, which helps track sales, marketing and customer service. If the deal closes, Oracle -- the No. 1 maker of modern databases -- will also become the world's biggest CRM software vendor, technology market research firm IDC said. Siebel Systems employs about 5,000 workers, many of whom are expected to lose their jobs as Oracle cuts costs in an effort to boost its profits by about 20 percent annually.

In the past nine months, Oracle has either completed or announced five takeovers of business applications software makers, an expansion that has cost more than USD 17.6 billion so far. The spree has swept up two of the industry's best-known names, PeopleSoft Inc. and Siebel Systems, both of which were run by former Oracle executives. PeopleSoft was headed by former Oracle executive Craig Conway. Thomas Siebel, who established Siebel in 1993 after a career at Oracle, will return to his former employer to help execute the merger.

Oracle's fondness for buying competitors has compelled Microsoft to consider fighting back with purchases of its own. Although Microsoft and SAP discussed the possibility of a merger, the talks haven't yet resulted in one. It's unclear whether the latest Oracle move may spur Microsoft to reopen talks with SAP or to seek another acquisition.