San Francisco – Oracle Corp. is buying hobbled Siebel Systems Inc. for about $5.85 billion, eliminating another competitor in its campaign to grab market share from business applications software leader SAP AG.
Under the terms of the deal announced Monday, Redwood Shores-based Oracle will pay $10.66 per share in cash or stock for Siebel, whose products help manage companies’ relations with customers.
The price represented a 17 percent premium from Siebel’s market value entering Monday. Despite four years of flagging fortunes, Siebel still has $2.24 billion in cash, reducing Oracle’s net takeover cost to $3.6 billion.
Shares of San Mateo-based Siebel rose $1.16, or nearly 13 percent, to close at $10.29 during late afternoon trading on the Nasdaq Stock Market, where Oracle’s shares gained 21 cents to finish at $13.49.
The deal accelerates the drive by Oracle chief executive Larry Ellison to overtake SAP as the world’s largest maker of business applications software, which automates a wide range of administrative tasks.
In the past nine months, Oracle has either completed or announced five takeovers in the field, an expansion that has cost more than $17.6 billion. Among the acquired was PeopleSoft Inc., which like Siebel Systems was run by a former Oracle executive who had developed a frosty relationship with Ellison.
Oracle acquired PeopleSoft early this year, after PeopleSoft merged with Denver-based J.D. Edwards & Co. in July 2003.
Industry analyst Richard Williams of Garban Institutional Equities predicted Oracle will lay off more than 2,000 workers, based on the percentage of jobs the company eliminated after devouring PeopleSoft, which had about 11,000 employees. Oracle fired 5,000 workers after that deal.
“Mergers are always difficult, so doing so many at once only compounds the difficult,” said Octavio Marenzi, chief executive of technology consultant Celent. “This appears to be an unduly risky strategy.”
