Today the debt-funded M&A scramble continued, when moments ago software giant Oracle announced it would acquire the “very first cloud company” NetSuite, a deal that some analysts thought was inevitable while panned by others and represents one of Oracle’s largest ever acquisitions. The transaction price of $109/share, which value NetSuite at $9.3 billion, represents a nearly 20% premium to yesterday’s closing print, and is expected to be immediately accretive to Oracle.
As the WSJ notes, the deal reunites Oracle Chairman Larry Ellison with Zach Nelson, NetSuite’s chief executive, who ran Oracle’s marketing operations in the 1990s. Mr. Ellison is NetSuite’s largest investor; entities owned by Mr. Ellison and his family held nearly 40% of NetSuite’s shares, according to NetSuite’s annual proxy statement filed in April. Both companies provide run-the-business applications known as enterprise-resource planning software, but NetSuite is among the leaders in providing those offerings to customers via subscription-based, on-demand computing.
With the purchase of NetSuite, which provides cloud-based financials/ ERP and “omnichannel” commerce software products to more than 30,000 companies, Oracle has again confirmed that the path to rapid organic growth in this sector has gotten far more “cloudy.”
While Oracle has improved its own homegrown cloud products, it is battling companies such as such as Salesforce.com Inc. and Workday Inc. that deliver software and storage solely on the web, while also fighting to keep pace with industry giants including Microsoft Corp. and Amazon.com Inc. that have built huge businesses running customers’ computing operations in the cloud.
From the press release:
Oracle (ORCL) today announced that it has entered into a definitive agreement to acquire NetSuite (NYSE:N), the very first cloud company. The transaction is valued at $109.00 per share in cash, or approximately $9.3 billion.
“Oracle and NetSuite cloud applications are complementary, and will coexist in the marketplace forever,” said Mark Hurd, Chief Executive Officer, Oracle. “We intend to invest heavily in both products – engineering and distribution.”
“We expect this acquisition to be immediately accretive to Oracle’s earnings on a non-GAAP basis in the first full fiscal year after closing,” said Safra Catz, Chief Executive Officer, Oracle.
“NetSuite has been working for 18 years to develop a single system for running a business in the cloud,” said Evan Goldberg, Founder, Chief Technology Officer and Chairman, NetSuite. “This combination is a winner for NetSuite’s customers, employees and partners.”
“NetSuite will benefit from Oracle’s global scale and reach to accelerate the availability of our cloud solutions in more industries and more countries,” said Zach Nelson, Chief Executive Officer, NetSuite. “We are excited to join Oracle and accelerate our pace of innovation.”
The evaluation and negotiation of the transaction was led by a Special Committee of Oracle’s Board of Directors consisting solely of independent directors. The Special Committee unanimously approved the transaction on behalf of Oracle and its Board of Directors.
The transaction is expected to close in 2016. The closing of the transaction is subject to receiving certain regulatory approvals and satisfying other closing conditions including NetSuite stockholders tendering a majority of NetSuite’s outstanding shares in the tender offer. In addition, the closing is subject to a condition that a majority of NetSuite’s outstanding shares not owned by executive officers or directors of NetSuite, or persons affiliated with Larry Ellison, his family members and any affiliated entities, be tendered in the tender offer.
The post M&A Rush Continues: Oracle Buys “Very First Cloud Company” NetSuite For $9.3 Billion appeared first on crude-oil.top.