ARTG Art Technology Grp., Inc. (MM)

Oracle Corp. (ORCL) agreed to pay nearly $1 billion for Art Technology Group Inc. (ARTG), helping the business-software giant expand into e-commerce.

Art Technology is one of the leading providers of e-commerce software, a sector that has been thriving as businesses seek new ways for their customers to buy products online and through their mobile devices. The company's customers range include telecom company AT&T Inc. (T), electronics retailer Best Buy Co. Inc. (BBY) and Continental Airlines, now part of United Continental Holdings Inc. (UAL).

Oracle said it will pay $6 a share for Art Technology, a 46% premium to Monday's closing price and a level last seen in 2001 as the Internet bubble was still deflating. Art Technology shares soared 45% to $5.96 in recent trading Tuesday, while Oracle shares, up 20% this year, recently rose 1% to $29.43.

The deal, subject to shareholder and regulatory approval, is expected to close by early 2011.

The agreement comes at a time of heightened merger and acquisition activity in the technology sector as cash-rich tech companies look for smart uses for their money. Oracle and other tech giants including Hewlett-Packard Co. (HPQ), Intel Corp. (INTC) and International Business Machines Corp. (IBM) have all made purchases of smaller tech firms this year.

Oracle Chief Executive Larry Ellison recently said he would be interested in buying intellectual property of all kinds, including semiconductor and software companies. The comments set off a surge in speculation about which companies Oracle might buy.

Even with the $1 billion acquisition of Art Technology, analysts said Oracle likely is still looking for other purchases.

Avian Securities analyst Jeff Gaggin said the acquisition fits nicely with Oracle's current products, but the company might look to make other purchases in the systems management space.

Oracle's acquisition of Art Technology helps it move into the fast-growing consumer e-commerce market, an area where Oracle has little presence, Gartner analyst Gene Alvarez said. He added that Oracle does provide business-to-business e-commerce, one area that's helping drive growth in the sector. The total e-commerce market is expected to grow 25% by 2017, Alvarez said, compared with a 7% to 10% climb over the past three years.

"Buying online has become safe and ubiquitous, and a lot of organizations are going global with sales," Alvarez said.

Still, the Art Technology deal isn't Oracle's first foray into retail. The company in 2005 bought Retek Inc., which provides software to help retailers manage their businesses, after besting SAP AG (SAG) in a bidding war.

"They have a fairly good retail business, but this really gives them a nice foothold in the e-commerce part of the retail market," Evercore Partners analyst S. Kirk Materne said. He added the deal will help Oracle compete more effectively with IBM's WebSphere retail business.

"I think with Oracle's distribution capabilities and Art products, the ability for Art's partner base to show strong growth is really high," Materne said.

Meanwhile, Art Technology posted a third-quarter profit of $4.2 million, or 3 cents a share, compared with $4 million, or 3 cents a share, a year earlier. Excluding stock compensation and acquisition impacts, profit rose to 5 cents from 4 cents a share as revenue climbed 16% to $50.3 million.

Analysts' mean estimate was for earnings of 4 cents a share on revenue of $48 million, according to Thomson Reuters.

Product license bookings jumped 37% from the previous year, with about 26% of the bookings deferred to future periods.

-By Shara Tibken, Dow Jones Newswires; 212-416-2189; shara.tibken@dowjones.com

(Kevin Kingsbury contributed to this article.)

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