Oracle Set To Finish NetSuite Purchase -- WSJ

By Jay Greene

Oracle Corp. has moved a 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.

Oracle said Saturday that the deal for NetSuite would close Monday.

The deal has been complicated by opposition from NetSuite's largest institutional shareholder, T. Rowe Price Group Inc. The investment firm held 14.4 million NetSuite shares, or 17.7% of the company's outstanding stock, as of Nov. 1, and 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 its 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 damped 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 such as finance and human resources, collectively called enterprise-resource planning. Acquiring NetSuite would boost Oracle's cloud-computing offerings, a market segment where the company has been a laggard and is racing to add services.

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

(END) Dow Jones Newswires

November 07, 2016 02:48 ET (07:48 GMT)

Netsuite (delisted) (NYSE:N)
Historical Stock Chart
From Apr 2024 to May 2024