Oracle To Buy Siebel Systems
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Oracle, the world’s third-largest software maker, agreed to buy Siebel Systems for $5.85 billion, leapfrogging SAP to become the top seller of programs that manage customer relations.
Siebel investors will receive $10.66 a share in cash or stock, Redwood City, Calif.-based Oracle said yesterday in a statement. That’s 17% more than Siebel’s closing price September 9.
The purchase, Oracle’s seventh this year, reunites Chief Executive Officer Larry Ellison and former protege Tom Siebel. The acquisition also helps Oracle tap the biggest and fastest-growing slice of the market for business applications. Siebel lost the top spot in the market to Germany’s SAP in 2004 because clients wanted to buy broader packages of software that run everything from customer service to accounting to human resources.
“Siebel had a business that didn’t appear fixable,” the president of Providence Capital, Herbert Denton, said. Providence has been among the holders calling for the company to be sold.
“The notion that they were going to get back to double-digit growth was farfetched, and reality caught up with the board,” Mr. Denton said.
The deal builds on a process that began with the $10.6 billion hostile takeover of PeopleSoft in January to help cut Oracle’s reliance on database software, which makes up 80% of sales.
The Siebel bid came after clients including General Electric encouraged the deal, the 61-year-old Mr. Ellison said on a conference call yesterday.
Siebel shares gained $1.16 to $10.29 at 4 p.m. New York time in Nasdaq Stock Market composite trading. They had dropped 13% this year before yesterday.
The purchase, negotiated between Oracle co-President Charles Phillips and Tom Siebel in the past several months, accelerates consolidation in the software industry. Anti-virus program maker Symantec bought Veritas Software in July. International Business Machines in May bought Ascential Software.
Siebel is attractive because it has a wider set of programs in this area than competitors, with some fine-tuned for industries such as financial services, communications, and government, Mr. Ellison said.
