12 September 2005 Software maker Oracle has reached agreement to acquire long-term target Siebel Systems, a deal that will see it pay nearly $5.85 billion for its customer relationship management rival.
Oracle first revealed its desire to snap up Siebel during court proceedings surrounding its protracted acquisition of business applications vendor PeopleSoft.
Senior executives from Oracle and Siebel have met a number of times to discuss a deal, but had, until now, been unable to reach agreement.
Now, Siebel’s board of directors have approved a $10.66 per share offer from Oracle. That values the company at $5.85 billion, although Siebel also has $2.24 billion in cash, effectively meaning Oracle will pay $3.61 billion. Siebel’s revenues for fiscal 2004 were $1.32 billion.
Oracle has undertaken a series of acquisitions in recent times, including its $10.3 billion purchase of PeopleSoft, as part of a desperate attempt to gain market share from enterprise application leader SAP.
Siebel – a one-time darling of Wall Street investors and the trail blazer for the CRM business – has been locked in battles of its own. Both SAP and newcomer Salesforce.com have eaten away at Siebel’s early leadership of the CRM market.
As a result, software licence revenues have fallen at Siebel. Earlier this year it ousted its CEO Mike Lawrie after less than a year in charge, as revenues fell. Siebel’s shareholders have pressed for the company to either be sold or for it to use its cash pile to buy back shares.
“This is a very beneficial business combination that will allow us to be even more effective in delivering high quality solutions,” said Siebel founder and CEO Tom Siebel – a former Oracle sales executive and bitter rival of Oracle’s outspoken founder Larry Ellison.
The deal is expected to close by early 2006, subject to the usual regulatory approval.