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Oracle conquers Siebel at $10.66 a share

Buying like it's 1999

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Larry Ellison buried another pile of hatchets this morning when he sealed Oracle’s acquisition of Siebel Systems for $3.61bn.

Oracle CEO Ellison claims the deal “vaults” the database vendor into the number one position in the CRM market and moves it closer to being the world’s number one applications player.

Redwood Shores’ finest will stump up $10.66 a share for Siebel, valuing the total deal at $5.85bn, or $3.61bn once Siebel’s $2.24bn cash pile is taken into account. Oracle gains 4,000 customers and 3.4 million users. The deal should close early next year.

The surprise buy caps a run of big money acquisitions for Oracle. It sealed its $10bn acquisition of PeopleSoft in January following a long and vicious hostile takeover battle. Shortly after that it paid $670m for retail specialist Retek.

While Oracle can now claim to be number one in the CRM market, it could have been there a lot quicker if Tom Siebel, founder of the eponymous firm, hadn’t walked out of Oracle at the end of the 1980s because the database vendor wouldn’t listen to his ideas for creating what became the CRM market. The two companies, and respective bosses Ellison and Siebel, subsequently enjoyed what was seen as at best an acrimonious relationship.

In recent years, though, some would argue that Tom Siebel himself posed more of a threat to his company than Larry Ellison. The famously volatile CEO and chairman drove Siebel Systems to its peak only to see it slowly tailspin after the turn of the millennium, with Siebel himself being criticized as an autocratic leader. Its shares touched the $200 mark at the height of the 90s tech boom, but were trading at $9.13 at the close of last week.

Many Siebel execs jumped ship, with hosted CRM specialist Salesforce.com a favoured haven. Siebel eventually launched into the on-demand CRM market, but Salesforce had already established a strong lead there. Siebel handed over the CEO role last year, retaining the chairmanship.

There was no mention today of Tom Siebel’s future plans.

Funnily enough, Salesforce was started by Marc Benioff, an Oracle alumnus, although his departure from Oracle was a lot more friendly than Siebel’s. Oracle was an early backer of Salesforce. So, should Oracle decide it needs to add a little oomph to Siebel’s own online offering, the list of potential candidates should be very short indeed. Assuming, of course, another major software firm with a moribund CRM strategy doesn’t step in first.®

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