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Oracle to buy retail software company ATG

NEW YORK (Reuters) - Oracle Corp plans to buy e-commerce software company Art Technology Group Inc for $1 billion 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 on Tuesday, represents a 46 percent premium over ATG’s close of $4.10 on Nasdaq. ATG shares were trading at $5.96 in Nasdaq trading.

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 Corp.

They also said the price seemed reasonable, and Oracle shares rose 1.1 percent to $29.43 by midday.

“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 Inc, the world’s No. 2 PC maker, on Tuesday 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.

EXPAND INTO E-COMMERCE

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 Inc, AT&T and Vodafone Group Plc. 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 $50.3 million in the third quarter, up 16 percent from $43.4 million a year earlier.

The offer values ATG at around 4 times expected sales for 2011. Roth Capital Partners analyst Nathan Schneiderman said the valuation placed it at the high end for the industry, and that he did not expect a rival bid, although he added that recent dealmaking activity meant it could not be completely ruled out.

“Generally, there’s not additional bidding after an offer like this,” Schneiderman said. “But we have seen bidding battles for software companies. We have seen it often enough that it’s a dynamic.”

Oracle is in a California court on Tuesday seeking some $2 billion in damages from rival SAP AG on accusations that SAP stole its software.

Reporting by Liana B. Baker; additional reporting by Ritsuko Ando in New York and Swati Chitnis in Bangalore; Editing by Derek Caney, Dave Zimmerman

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