Oracle Swallows Siebel

Oracle Corp.'s (Nasdaq: ORCL) M&A tear continues apace, with the software giant stumping up $5.85 billion today for customer relationship management (CRM) specialist Siebel Systems Inc. (Nasdaq: SEBL).

But Oracle execs have promised that digesting Siebel will be a lot easier than the 18-month war of attrition the company recently fought to get its hands on PeopleSoft (see Oracle Takes Control of PeopleSoft, Oracle & PeopleSoft: The Final Round and PeopleSoft Plot Thickens).

This is dramatically easier than the PeopleSoft transaction,” said Oracle CEO Larry Ellison during a conference call this morning. The exec pointed out that PeopleSoft had only recently bought J.D Edwards, which made the deal much more complicated. “Siebel isn’t the amalgam of two companies that have just got together.”

Certainly, initial signs are that Oracle is unlikely to face the mud-slinging and boardroom upheaval that characterized the PeopleSoft deal (see Oracle Battles With PeopleSoft and PeopleSoft Suffers Crisis of Confidence). Siebel’s board has already put its weight behind the deal and, additionally, the two firms’ CEOs go back a long way. “Larry and I know each other very well,” said Siebel’s chairman and founder Thomas Siebel, noting that their relationship stretches back over 23 years.

According to the Siebel chairman, discussions about merging the two companies have been “going on for years,” which also suggests that Oracle should be dealing with a much more straightforward acquisition.The transaction, however, is still subject to Siebel shareholder and regulatory approval, although Oracle expects the deal to close early next year.

In a statement released this morning, Oracle also said it plans to retain Siebel’s workforce of more than 5,000 employees. “We will look to Siebel management and employees to help ensure the long-term success of our combined CRM strategy.”

Although Siebel is regarded as a leader in the CRM space, Oracle is also getting its paws on a substantial customer base, which includes more than 4,000 organizations. Ellison says the two companies already share some big-name customers, some of which have already been calling on them to join forces: “General Electric and other large mutual customers have encouraged us.”

The deal is also part of Oracle’s ongoing strategy to pressurize its arch rival SAP AG (NYSE/Frankfurt: SAP). (See Oracle Increases Retek Offer and SAP Sidles Up to PeopleSoft Users. In keeping with the company’s combative tone over recent months, one Oracle exec on this morning’s call characterized the deal as a “beach-head” against the German software giant.

Ellison, however, sought to reassure any Siebel customers that may now be concerned about support issues. “We will continue to support the existing suite of Siebel products for many, many years,” he said, while observing that this will be similar to the long-term support currently offered on PeopleSoft products (see Oracle Shares PeopleSoft Plans).Oracle, according to Ellison, will eventually offer a “CRM suite,” as part of its Project Fusion, a set of applications scheduled for launch in 2008, which will merge the Oracle and PeopleSoft product lines. “The Siebel products will be the centerpiece of our CRM investments moving forward.".

Execs also confirmed that Oracle will be taking something of a hiatus from M&A mega-deals, focusing instead on smaller acquisitions in specific market sectors. “I don’t think that you will see another major acquisition anytime soon,” said Ellison. “I think that going forward you will see us concentrating on key industries."

Recently Oracle has targeted areas such as banking and retail in an effort to boost what it sees as key verticals (see Oracle's on the Prowl, Oracle Spends $900M for i-flex Stake and Oracle Acquires Retek).

In trading today, shares of Oracle rose 9 cents (0.68 percent) to $13.37. Siebel shares, however, leapt $1.20 (13.14 percent) to $10.33.

— James Rogers, Site Editor, Next-Gen Data Center Forum0