M&A Rush Continues: Oracle Buys "Very First Cloud Company" NetSuite For $9.3 Billion

Today the debt-funded M&A scramble continued, when moments ago software giant Oracle (ORCL) announced it would acquire the "very first cloud company" NetSuite (N), 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:

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Somesh Ramnani 1 year ago Contributor's comment

Nice pickup by $ORCL. Definitely the right way to keep fighting in the industry.