Oracle to Buy NetSuite for $9.3 billion--2nd Update
July 28 2016 - 10:14AM
Dow Jones News
By Jay Greene
Oracle Corp. agreed to buy NetSuite Inc. for $9.3 billion,
bolstering the software maker's cloud-computing offerings as it
races to catch up to rivals.
Oracle is paying $109 in cash for NetSuite, a 19% premium to the
company's closing price Wednesday of $91.57. The deal is expected
to close in 2016, subject to regulatory and shareholder
approval.
The deal, among the largest in Oracle's history, reunites
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 applications for running a business
called enterprise-resource planning software. NetSuite, though, is
among the leaders in providing those offerings to customers via
subscription-based, on-demand computing.
Oracle said it plans to invest heavily in both products, and
that the deal would immediately add to its earnings, on an adjusted
basis.
While Oracle has improved its homegrown cloud products, it is
battling companies such as Salesforce.com Inc. and Workday Inc.,
which deliver software and storage solely on the web. Oracle also
is fighting to keep pace with giants including Microsoft Corp. and
Amazon.com Inc., which have built large businesses running
customers' computing operations in the cloud.
Separately, NetSuite also reported its quarterly results.
Revenue in the second quarter rose 30% to $230.8 million, but its
loss widened to $37.7 million from $32.3 million in the year-ago
period. Excluding certain costs, such as expenses related to
stock-based compensation, NetSuite's earnings rose to $6.6 million,
or 8 cents a share, from $1.7 million, or 2 cents a share.
Analysts surveyed by Thomson Reuters were expecting earnings of
3 cents a share on revenue of $231 million.
In morning trading in New York, shares of NetSuite rose 18% to
$108.01, while Oracle shares slid 3 cents to $40.90.
Oracle is an aggressive acquirer. spending more than $1 billion
in recent months to buy Opower Inc., which makes cloud software for
the utility industry, and Textura Corp., which provides similar
services for construction businesses.
The largest recent multibillion deal was Oracle's $5.3 billion
purchase in 2014 of Micros Systems Inc., which sells
internet-connected cash registers.
Oracle's other big acquisitions include its acrimonious hostile
takeover of PeopleSoft Inc. for $10.3 billion in 2004, another
hostile purchase of BEA Systems Inc. for $8.5 billion in 2008, and
its 2009 deal to buy Sun Microsystems Inc. for $7.4 billion.
Write to Jay Greene at Jay.Greene@wsj.com
(END) Dow Jones Newswires
July 28, 2016 09:59 ET (13:59 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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