Oracle Corp's acquisition of retail software maker Retek Inc could distract the software giant from integrating its recent $10.3 billion acquisition of PeopleSoft Inc, analysts said on Wednesday. Oracle has said the PeopleSoft integration was going well and that integrating Retek would be relatively painless. But some analysts suggested that a second acquisition could be hard for Oracle to digest.
"We are concerned that the PeopleSoft acquisition has already strained managerial resources that would be further stretched by another merger," said Charles Di Bona, an analyst with Sanford Bernstein.
Oracle on Tuesday offered to buy Retek for $525 million, trumping an earlier $496 million bid by its archrival SAP AG, the market leader in business planning software. SAP on Wednesday said it had no comment about Oracle's bid.
Analysts said they expect SAP to counter the offer, but added that Oracle should not get caught up in a bidding war.
"We don't think it would be good for Oracle to get into a bidding war with SAP," Adam Holt, analyst with J.P. Morgan, said. "It sends a mixed signal to the market that they would be acquisitive during the PeopleSoft integration."
Software acquisitions are complicated because they require the integration of different software codes. SAP and Microsoft have already showered PeopleSoft customers with discounts trying to lure them away while Oracle digests PeopleSoft.
Oracle Chief Executive Larry Ellison told analysts on Tuesday the proposed Retek deal was aimed at protecting Oracle's top position in the US business software market from SAP, which sees the market as its most lucrative.
Ellison also tried to dispel concerns that another deal would be a distraction from integrating PeopleSoft, saying the PeopleSoft integration was going "quite well."
He said most of Retek customers, which include The Gap and Best Buy, already use Oracle's database and "middleware" software that connects different software.
As such, Ellison said Oracle would also not have to undertake the complex and time-consuming task of integrating Retek's software code into Oracle's, Ellison said.
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