Oracle has agreed to buy Siebel System for $10.66 per share. The offer is valued at approximately $5.85 billion, or $3.61 billion net of Siebel`s cash on hand of $2.24 billion.
"In a single step, Oracle becomes the number one CRM applications company in the world," says CEO Larry Ellison.
"Siebel`s 4 000 applications customers and 3 400 000 CRM users strengthen our number one position in applications in North America and move us closer to the number one position in applications globally."
Siebel chairman Thomas M Siebel says the combination of Siebel applications with the development capacity of Oracle to enhance CRM is good news for Siebel customers and "a very beneficial business combination".
In a conference call following the announcement, both companies described the acquisition as "friendly" and essentially "customer-driven", with Oracle representatives commenting that it would proceed much more easily and quickly than Oracle`s controversial and protracted acquisition of PeopleSoft.
"Our joint customers have consistently recommended this transaction to both companies for over a year," said Oracle president Charles Phillips. "We will embrace Siebel`s best-in-class CRM products and make the features of those products the centerpiece of our Project Fusion CRM."
Philips also described the deal as another major beachhead against SAP.
Oracle President and CFO Greg Maffei said in the longer term Siebel was expected to contribute to Oracle`s stated goal of 20 percent annual earnings growth. He also said it was unlikely that Oracle would pursue any further major acquisitions "any time soon".
Ellison gave the assurance Siebel customers would be supported for "many years to come". He also said Siebel would become the centrepiece of Oracle`s CRM offerings, with CRM having its own dedicated salesforce, separate from ERP.
Oracle said earlier in a press release that of all major segments of the enterprise applications business, CRM is the largest and fastest growing - estimated to be more than $8 billion in 2004 and expected to grow to $10 billion by 2009, according to IDC.
Oracle said Siebel`s board of directors voted in favour of the transaction, and Tom Siebel has agreed to vote his shares in favour of the acquisition. Siebel stockholders will convene in a special meeting to vote on the acquisition. Oracle stockholder approval is not required.
While the transaction and the timing are subject to regulatory approvals, the deal is expected to close in early 2006.
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