Oracle Buys NetSuite for $9.3 Billion

Oracle Is Buying NetSuite

Oracle Corp., lagging the competition in cloud-based services, is essentially buying market share with its $9.3 billion acquisition of NetSuite Inc.

Oracle has been trying for years to shift from selling software installed on corporate customers’ gear the old way to delivering it over the internet. Yet in its most recent quarter, the company said the cloud division accounted for less than 10 percent of sales. Buying NetSuite, one of the first cloud-services companies, will help Oracle compete against the likes of Inc., Microsoft Corp. and SAP SE.

“NetSuite is really pioneering cloud and this will certainly add to Oracle,” said Bill Kreher, an analyst at Edward Jones & Co. “I think acquisitions are certainly consistent with the company’s long-term pedigree and strategy. You’ve got to pay for that type of growth.”

 The deal had been rumored for months, not just because of its inherent logic but because the relationship between Oracle and NetSuite goes back decades. Oracle co-founder Larry Ellison has been a NetSuite investor since he co-founded the company with Evan Goldberg in 1998. Ellison and his family own about 45.4 percent of NetSuite’s common stock, according to a recent company filing. Zach Nelson, NetSuite’s CEO, ran Oracle’s marketing operations in the 1990s.

Oracle is paying $109 a share, a 19 percent premium over NetSuite’s closing share price Wednesday. The merger is the latest in a slew of business software acquisitions. Earlier this year, Microsoft agreed to buy LinkedIn for $26.2 billion. Meanwhile, Salesforce spent more than $2.5 billion to buy Demandware, which sells cloud-based e-commerce software, and Symantec said it would purchase Blue Coat Systems Inc. for $4.65 billion.

Read complete post at: Bloomberg

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