Oracle Set to Complete $9.3 Deal to Buy NetSuite

By Jay Greene

Oracle Corp. announced that it had moved one step closer to completing its $9.3 billion deal to buy NetSuite Inc. after accumulating enough shares from the cloud-computing pioneer's stockholders to approve the acquisition.

The deal has been complicated by opposition from NetSuite's largest institutional shareholder, T. Rowe Price Group Inc. The investment firm, which held 14.4 million NetSuite shares or 17.7% of the company's outstanding stock as of Nov. 1, said in September that it wouldn't tender its shares in support of the deal. It cited the conflict of interest created by the substantial NetSuite stockholdings by Oracle executive chairman Larry Ellison and his family, saying the $109 a share price was too low.

Last week, T. Rowe sent a letter to a special committee of Oracle's board, saying it would tender its shares in favor of the deal if the software giant boosted is bid to $133 a share. Earlier that week, Oracle Chief Executive Mark Hurd told CNBC that the company's $109-a-share bid is its "best and final offer."

In a September regulatory filing, NetSuite said Mr. Ellison has an "indirect beneficial ownership of approximately 39.5%" of NetSuite's common stock. To address concerns about the conflict of interest, Oracle and NetSuite agreed that the deal would close only if owners of a majority of NetSuite shares not held by Mr. Ellison and his family approve the transaction.

That gave independent NetSuite shareholders, such as T. Rowe, significant clout in approving the deal.

The tender was originally set to close on Sept. 15. But Oracle extended the deadline to Oct. 6 "to facilitate the completion of outstanding antitrust reviews." T. Rowe's opposition led Oracle to extend its deadline a second time last month, after receiving only about a quarter of the shares necessary to complete the deal.

NetSuite's shares climbed close to $109 after the deal was announced. But T. Rowe's opposition has dampened investor enthusiasm. The shares fell below $90 on Wednesday to close at $89.16. On Friday, the stock closed at $90.34. In a research note sent to clients Thursday, Barclays analyst Raimo Lenschow wrote that NetSuite shares could slide to between $60 and $80 if the deal collapsed.

Both companies provide business applications that help automate operations in various areas including finance and human resources, collectively called enterprise-resource planning. Acquiring NetSuite will boost Oracle's cloud-computing offerings, a market segment where the company has been a laggard and is racing to add new services.

Write to Jay Greene at Jay.Greene@wsj.com

(END) Dow Jones Newswires

November 05, 2016 01:48 ET (05:48 GMT)

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