Oracle Corp. agreed to buy NetSuite Inc. for $9.3 billion, among the largest acquisitions in its history, bolstering the business software maker’s cloud-computing offerings, an area where it is racing to catch up to rivals.
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“We intend to invest heavily in both products – engineering and distribution”, said Oracle co-CEO Mark Hurd.
Oracle said the deal should be “immediately accretive” to adjusted earnings this year after the deal closes.
NetSuite’s specialty is providing software to businesses that lives in the “cloud”, rather than on companies’ own servers.
NetSuite CEO Zach Nelson is a former Oracle executive.
“We expect NetSuite to utilize Oracle’s global scale and reach to accelerate the availability of its cloud solutions in more industries and more countries”, the FAQ sheet reads.
The deal is subject to regulatory approval, expected to close before the end of the year.
The NetSuite purchase, on the other hand, is at the heart of Oracle’s fight to remake itself for the modern world of cloud computing, which involves providing vast computational resources over the Internet. “NetSuit’s cloud approach fills holes in Oracle’s cloud strategy in key verticals”.
Dealogic said Oracle-NetSuite acquisition at 19 percent premium for NetSuite is lower than the industry average of 26 percent premium for similar technology mergers and acquisitions.
NetSuite had 4,682 full-time employees as of March 31, 2016, according to an SEC filing. Nelson worked with Oracle in marketing during the 1990s, and Ellison and his family already have a big stake in NetSuite. In June, it acquired cloud service company Textura for $663 million and device data company Crosswise for a reported $500 million. Currently, it is trading at $108.08 per share while Oracle has dipped slightly to $40.88.
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For the quarter net revenues were up 30 per cent year on year to $US230M.
