Oracle proposes to buy Siebel
Oracle Corporation has agreed to buy Siebel Systems Inc. for US$10.66 per share, in a deal valued at some US$5.85 billion - a deal that will certainly reshape a significant part of the CRM applications market.
Oracle's CEO, Larry Ellison, commented: "Siebel's 4,000 applications customers and 3,400,000 CRM users would strengthen Oracle's position in applications in North America."
Those in favour Siebel's board of directors has already voted in favour of the deal, and Tom Siebel (chairman of Siebel Systems) has also agreed to vote his own shares in favour of the acquisition. Siebel stockholders are to convene in a special meeting to vote on the acquisition (while 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.
Siebel shareholders will receive US$10.66 per share in cash for each Siebel share held, unless they elect to receive Oracle common stock (although no more than 30% of Siebel's common shares may be exchanged for Oracle common stock). In the event that Siebel shareholders holding more than 30% of Siebel common stock elect to receive Oracle common stock, the equity consideration will be pro-rated.
Share deals The measurement period for Oracle's average share price will be the ten trading days ending the day prior to the deal's closing date, and Oracle will then have the right to choose an election date during the twenty trading days ending two days before closing. If Oracle's average share price is at or above US$10.72 prior to close, Siebel shareholders who elect to receive stock will receive US$10.66 per share of value in Oracle common stock for each share of Siebel common stock held. Or, if Oracle's average share price prior to close is less than US$10.72 per share, Siebel shareholders that elect to receive stock will receive 0.994 shares of Oracle common stock for each share of Siebel common stock held, which would result in a value of less than US$10.66 per share. Oracle intends to repurchase an amount of shares equal to the number of shares issued in the transaction.
Growth market According to Oracle, of all major segments of the enterprise applications industry, CRM is the largest and fastest growing. The market is reported to be worth more than US$8 billion in 2004 and expected to grow to some US$10 billion by 2009, according to IDC.
Siebel's CRM and Oracle's enterprise applications and middleware share an architecture that centres on industry standards, and a significant majority of Siebel's implementations also run on Oracle's database systems.
Mutual benefit Commenting on the deal, Tom Siebel said: "This is a very beneficial business combination that will allow us to be even more effective in delivering high quality solutions into the hands of our customers."
Oracle's president, Charles Phillips, added: "This is a customer driven event. Our joint customers have consistently recommended this transaction to both companies for over a year. We will embrace Siebel's CRM products and make the features of those products the centrepiece of our Project Fusion CRM."