LE plans to buy e-commerce software company Art Technology Group for $1bn in cash to compete with other large technology vendors like IBM which have been expanding their software lineups.
Oracle’s $6-per-share bid, announced yesterday, represents a 46 per cent premium over ATG’s close of $4.10 on Nasdaq.
Analysts said the acquisition, due to close early next year, was a good move for Oracle as it boosted its competitive position against Salesforce.com, as well as International Business Machine (IBM).
“It’s a nice, safe acquisition for Oracle,” said Avian Securities analyst Jeff Gaggin, adding that the deal will expand Oracle’s retail software portfolio, which includes Retek, a retail software company it acquired in 2005.
Large technology companies like Oracle, IBM, and Hewlett-Packard have recently been stepping up acquisitions of niche technology companies to diversify their product portfolios, aiming to become one-stop shops for storage, security and a wide range of software.
Dell, the world’s second-largest PC maker, yesterday announced it was buying a private cloud-computing company called Boomi.
In September, Dell lost out to HP in a bidding war for data storage company 3PAR.
Oracle’s latest move may also help the company expand sales to retailers trying to launch e-commerce services. More than 1,000 companies use ATG software to help with online customer transactions on mobile devices and in stores.
ATG’s customers include Best Buy Co, AT&T and Vodafone Group. It competes with Amazon.com and GSI Commerce.
Oracle’s vast sales force would also likely help boost ATG’s market reach. ATG, which is based in Cambridge Massachusetts, had sales of $50.3m in the third quarter, up 16 per cent from $43.4m a year earlier. The offer values ATG at around four times expected sales for 2011.