Siebel sells out to Oracle for $3.6 billion

Oracle today announced its second multibillion-dollar CRM acquisition in just 9 months, this time a friendly takeover of Siebel.

The companies agreed on a deal whereby Oracle will buy Siebel's stock for $10.66 per share. According to the statement, the overall deal is valued at $5.85 billion, but that includes Siebel's cash on hand of $2.24 billion. The net payout by Oracle apparently will be $3.6 billion. The deal is expected to close in early 2006, subject to Siebel shareholder vote and regulatory approvals.

In an early morning press conference Monday, Oracle CEO Larry Ellison was quick to underline what the deal means.

"Oracle is now No. 1 in sale automation, service automation, and call center automation [software markets]," he said. "And this brings us closer to our being No. 1 in [enterprise] applications globally." Achieving that latter goal, means dethroning Germany's SAP, whose ERP software is widely deployed by many large companies.

Siebel markets a suite of CRM applications, including versions tailored for several vertical industries, such as manufacturing and distribution, telecommunications, life sciences, financial services, and public sector, all specifically mentioned by Ellison as important targets for Oracle. Siebel's top customers reads like a who's who of high tech: IBM, HP, Microsoft, Cisco, and Sun, as well as Deutche Telecom, GM, and Bank of America.

To maintain Siebel's top position, Oracle will have a sales team specifically focused on selling only the CRM product line. While it will continue to offer Oracle's own CRM software, and the CRM product from PeopleSoft, Ellison made it clear that Siebel's software and its development and sales expertise will drive Oracle's future growth in this market.

"There's no question that Siebel products are more broadly deployed and more feature-rich," he said. "And they will be the centerpiece of our strategy going forward."

A key part of Siebel's business in the past quarters has been related to its hosted CRM solution, Siebel On-Demand. Ellison emphasized its importance to Oracle. "It's a key part of our strategy and a key reason for us to do the deal," he said. "We intend to invest heavily in the On-Demand products. And I think the features in the [enterprise] software will continue to migrate to the On-Demand product."

With the PeopleSoft purchase, Oracle launched what it calls Project Fusion: a massive effort to pull together what are now four separate application suites. These are Oracle's E-Business Suite, PeopleSoft Enterprise, J.D. Edwards EnterpriseOne (acquired by Peoplesoft just before PeopleSoft was snapped up by Oracle, and now the Siebel suite.

Ellison didn't go into details but did say Project Fusion would be written in Java but also provide full support for Microsoft J# development language and its .Net Framework.

Oracle closed its bitter $10.3 billion acquisition of PeopleSoft in January of this year. PeopleSoft waged a bruising, loosing battle to stave of the hostile takeover. In the press conference, Oracle executives said the work of integrating Siebel's products and employees will be faster, simpler and easier.