WASHINGTON, Sept. 13 (UPI) -- Software group Oracle's bid for Siebel Systems for a cool $5.85 billion Monday was greeted by many Wall Street analysts as a signal of the return of mega-mergers and better still -- renewed confidence in the information technology sector.
After all, earlier in the day online auction house eBay announced it will be acquiring Internet telecommunications group Skype for $2.6 billion.
As the world's biggest database-software company, the Silicon Valley-based Oracle would be acquiring a group that is one of the biggest players in customer relation management software
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One thing, however, is certain. For Thomas Siebel himself
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"The combination of Siebel applications with the development capacity of Oracle to enhance our (client relation management) product set ... is a very beneficial business combination that will allow us to be even more effective in delivering high quality, leading edge solutions
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Ellison too was equally ebullient about the deal, stating that "in a single step, Oracle becomes the number one CRM applications company in the world. Siebel's 4,000 applications customers and 3,400
www.bootsvonuggonline.com,000 CRM users strengthen our number one position in applications in North America and move us closer to the number one position in applications globally."
Analysts, however, were less effusive about the planned buyout, even when they agreed it could be a mutually beneficial deal.
Credit raters Standard & Poor's, for instance, said the deal would have "no impact" on Oracle's rating or outlook, even as it pointed out that the acquisition "is expected to significantly strengthen Oracle's global market position
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This is, of course
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While the bid for Siebel will certainly not be as controversial, some analysts including Janet White at Info-Tech Research Group of London, Ontario, argued that the purchase could actually stifle Oracle's longer-term prospects.
"By purchasing Siebel, Oracle has acquired an additional 3.4 million CRM users and the maintenance fees that go with that kind of installed base. However, where Oracle may be able to compete with (German rival) SAP on numbers in the short term, they may have trouble competing longer term on product innovation," White said.
She also argued that "Oracle is an applications company and it only makes sense that they will want to eventually move acquired customers over to their technology stack. But how much time will Oracle really have to integrate its existing portfolio, or create innovative new products, when it has to spend most of its time maintaining disparate, monolithic systems acquired through its recent acquisitions of PeopleSoft, JD Edwards and now Siebel
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Oracle will be paying $10.66 per share for Siebel's stock, considerably above Siebel's Friday closing price of $9.13. Thomas Siebel owns about 55 million shares, or just over 10 percent of total shares. The deal is expected to go through by early next year.
