Oracle's offer announced late Thursday was for 11.25 dollars a share, valuing the company at around 630 million dollars. The Silicon Valley group was seeking to trump the offer made this week by SAP of 11 dollars a share.

Oracle Corporation said separately it obtained clearance from the US Justice Department, which could have sought to block the deal on antitrust grounds.

"We have received word from the US regulatory authorities that the Oracle acquisition of Retek has received early termination (of its antitrust inquiry), clearing the way for Oracle to move forward with the transaction," said Jeff Lettes, an Oracle spokesman.

Analysts say Oracle, the world's second largest software group, is anxious to block a move by SAP, the leader in business management software, to get a stronger foothold in the US market.

Oracle chief executive Larry Ellison said in the statement, "Our North American applications business is larger than SAP's. We intend to defend our number one position."

Oracle also said in a statement it has already purchased 5.5 million shares of Retek common stock, representing nearly 10 percent of shares outstanding.

SAP had no immediate comment on the Oracle bid.

Based in Minneapolis, Minnesota, Retek has annual sales of 174.2 million dollars and employs a workforce of 525 worldwide. It specializes in software for retailers.

UBS analyst Heather Bellini said SAP and Oracle could sustain a bidding war valuing Retek up to around 15 dollars a share but surmised that SAP would not be drawn into an all-out bidding war.

Bellini said she thinks SAP management "did indeed make its best and final offer at 11 dollars a share. Rather than distract management time and resources by engaging in bidding games with Oracle, we expect SAP to move on," Bellini said in a note to clients.

At Bear Stearns, analysts told clients they expect SAP to walk away from the deal. They added that driving up Retek's price could potentially inflate valuations of other deal targets.

But Scott Langdoc at AMR Research said he believes the bidding war may escalate.

"There is no question that Oracle and SAP see the opportunity that the retail industry represents in terms of new application spending as large, legacy systems need to be replaced," he said.

"This deal is technically more important to Oracle, as it has no core retail functionality in the e-business suite today, and it wants to protect its current infrastructure position with retailers, but SAP needs Retek functionality to improve its current products and pull away further in the global retail software market."

Oracle shares fell 62 cents to 12.54 while Retek fell 18 cents to 11.47.

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