1 March 2005 Software giant SAP is set to strengthen its retail presence with a $496 million deal for supply chain specialist Retek.
Retek has a list of Blue Chip customers in retail including Gap, Sears, Sainsbury’s and Tesco, and specialises in supply chain optimisation.
Under the terms of the deal SAP will pay $496 million for Retek, although given its cash pile, the aggregate value of the deal is $394 million.
SAP CEO Henning Kagermann said the retail industry could be a significant opportunity for the growth of his company. “Retek offers many software solutions to augment its existing presence and will enable us to offer the most comprehensive solution in the industry, from the point of sale through the entire retail supply chain.”
SAP aims to use Retek’s products to attain leadership in a retail industry more hungry for packaged software. It believes retailers will increasingly incorporate IT into their strategy to drive competitive differentiation and business growth.
The deal for Retek underlines the degree of competition within the business software market. SAP is locked into a fierce battle with rivals Oracle, following its acquisition of PeopleSoft. Retek was originally built to work on top of Oracle’s database software.
Earlier this week SAP executives said it was aiming for 50% market share in the US by the end of 2005. The US has traditionally been a prime market for Oracle and PeopleSoft.
Retek has more than 200 customers in over 20 countries. Its revenues in 2004 were $174.2 million.