Oracle, the US technology group, yesterday agreed to buy Siebel Systems for $5.85 billion (€4.76 billion) in cash and stock, sealing its second large acquisition in less than a year.

The purchase will establish Oracle as the world's largest provider of customer relationship management (CRM) software and reunite two of Silicon Valley's most well-known executives.

Thomas Siebel, who established Siebel in 1993 after a career at Oracle, will return to his former employer to help execute the merger.

For Larry Ellison, Oracle's chief executive, the acquisition will cement his reputation as a prolific dealmaker. In December, Oracle agreed to buy PeopleSoft for about $10.5 billion, after winning an 18-month takeover battle, seeing off a high-profile, antitrust suit brought by the US Department of Justice.

Mr Ellison yesterday suggested the company's attention would now be focused on integration. "I don't think you'll see another major acquisition any time soon," he said. The purchase of Siebel will give Oracle access to 3.4 million users and 4,000 corporate customers of its CRM software, which helps companies track sales, marketing and customer service.

Both Oracle and Siebel said the tie-up was encouraged by a number of key customers, including General Electric. "There was a shift in market dynamics," said Mr Siebel, who added that customers now preferred an "integrated family of applications that minimises their cost structure".

Although CRM is one of the fastest growing segments of the software business, Siebel had been struggling to compete, prompting a group of investors - mostly hedge funds - to press management into pursuing a sale.

Siebel shareholders will receive $10.66 a share in cash for each Siebel share, unless they elect to receive Oracle stock. That's a 17 per cent premium on the Siebel share price on Friday. - (Financial Times service)