Oracle Corp. (ORCL) on Monday said it will buy rival software company Siebel Systems Inc. (SEBL), which has been long-mentioned as a possible takeover target, for $10.66 a share in a deal that valued Siebel at $5.85 billion.

Oracle, which will become the world's biggest customer relationship management software maker if the deal goes through, said the agreement was worth $3.61 billion after subtracting Siebel's $2.24 billion in cash.

The price per share represents a 16.8 pct premium to Siebel's closing share price of $9.13 on Friday.

Siebel gained prominence in the late 1990s as a top maker of software that helps companies better understand and manage their relationships with customers, one of the market's fastest-growing areas.

But as Siebel's share of that market gets chipped away by stiff competition, analysts have increasingly considered it a prime takeover prize for a rival like Oracle.

Shares of Siebel jumped almost than 14 percent to $10.39, while Oracle's shares fell 1.7 percent to $13.06.

Kaufman Brothers analyst Peter Jacobson said some shareholders might call for Oracle to pay more, but he noted that Siebel has struggled with performance and undergone a lot of organizational change.

"More often than not, these deals go through at agreed-to valuations," Jacobson said.

Oracle said the companies' joint customers have recommended such a deal for more than a year, and Siebel tagged the combination of its software applications with Oracle's development capacity as one of the deal's strengths. Most of Siebel's systems run on the Oracle database.

Siebel shareholders will receive $10.66 per share in cash unless they elect to be given Oracle common stock — but no more than 30 percent of Siebel's common shares will be exchanged for Oracle stock. The companies expected the deal to close early next year.