Oracle buys some muscle

Oracle (ORCL) today agreed to buy all outstanding shares of the client-server manufacturing software developer Datalogix International for $81 million in cash.

The Redwood Shores, California-based software company already holds a 13.4 percent stake in Datalogix worth $13 million. That brings the total value of the cash merger to $94 million, Oracle said.

Since 1994, Oracle has distributed and supported Datalogix's Global Enterprise Manufacturing Management System (GEMMS) and Computer Integrated Manufacturing for Process, which are software tools to automate the manufacturing process. GEMMS is already being sold in Oracle Applications, the company's suite of client-server business software.

Oracle said the merger will strengthen its foothold as a software supplier to the manufacturing industry. George Van Ness, Oracle's vice president for industry applications, said today that the Datalogix acquisition is part of a plan to "quicken" its investment and presence in the vertical manufacturing market.

"The acquisition will be one of the cornerstones of our vertical market strategy," Van Ness said. Its emphasis will be on manufacturers in the chemical, oil, gas, and processed goods sectors, he said.

The merger, which is expected to take about 90 days, comes after a two-year collaboration. The two companies spent about $4 million in shared research and development of manufacturing software tools.

"The acquisition will help us more effectively integrate" Oracle's discreet manufacturing tools and Datalogix's process manufacturing tools, he said.

Van Ness said Oracle has no immediate plans to change Datalogix's management or lay off its 300 employees, most of whom will continue work at the company's Valhalla, New York, headquarters.

"We think the administrative team at Datalogix is a pretty good team, but we would really not like to comment until we complete the merger," he said. The acquisition is pending approval by Datalogix's shareholders and by regulatory authorities.