Oracle to buy retail software vendor ProfitLogic

Oracle has reached a deal to acquire privately held ProfitLogic, a developer of software for the retail industry. Financial terms of the deal were not disclosed.

The acquisition comes on the heels of Oracle's April purchase of retail ERP (enterprise resource planning) software maker Retek for around US$670 million. ProfitLogic focuses on improving retailers' profit margins: Its software analyzes factors such as inventory, pricing and promotions to help retailers optimize their financial strategies. The company's customers include US retailers Sears, Roebuck & Co., Bloomingdale's, J. C. Penney and Burlington Coat Factory.

Adding ProfitLogic to a portfolio that also includes Retek's applications and Oracle's database and infrastructure software will help Oracle build its retail software line, the company said. Executives have previously identified the retail industry as a key growth opportunity for Oracle.

ProfitLogic is a smart purchase for Oracle, according to analyst Alexi Sarnevitz, AMR Research Inc.'s retail industry research director. He considers ProfitLogic's analytics software among the most sophisticated in the industry.

"Our overall perspective is that this is very positive for everybody involved," Sarnevitz said. "ProfitLogic brings a whole new set of industry and technical capabilities to Oracle to build on what Retek has. We see the capabilities here as very complementary."

Before buying Retek, Oracle had a limited presence in the retail industry. Now, in a matter of months, it has positioned itself as a major vendor in the sector, where its archrival SAP AG also competes. Oracle very publicly snatched Retek away from SAP, which initially agreed to buy the company for a lower price than Oracle paid, following a bidding war.

"This is part of the broader global battle between Oracle and SAP. What you're seeing here is a series of skirmishes," Sarnevitz said. "If you're at war with somebody, fighting for domination of the global ERP space, you don't want them to have a core vertical you don't compete in."

Pending regulatory approvals, Oracle expects the deal to close by the end of the month.

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