Oracle boosts cloud business with $9.3 bn acquisition

Oracle has announced it is to acquire fellow California-based cloud services and software provider, NetSuite, in a deal worth around $9.3 billion.

NetSuite Inc. stockholders will receive $109 per share, a 62 percent premium to the company’s Wednesday closing price of $67.42.

Oracle expects NetSuite to utilize Oracle’s global scale and reach to accelerate the availability of its cloud solutions in more industries and more countries, and is committed to protecting and enhancing customer investments in NetSuite solutions. Both companies provide cloud software and solutions, but said their offerings are complementary rather than competitive. “We intend to invest heavily in both products-engineering and distribution”, says Mark Hurd, Oracle CEO.

NetSuite brings Oracle nearly $800 million in revenue as well as an expanded market share, agreed Ray Wang, founder and principal analyst with Constellation Research.

Oracle has snapped up ERP and e-commerce provider NetSuite for some $9.3 billion in a maneuver to boost the company’s SaaS cloud portfolio.

Yet despite claiming to be misinterpreted, Ellison was quick to claim credit for actually inventing Cloud computing, when investing approximately $US125 million in initial financial backing to NetSuite through his venture capital entity Tako Ventures 18 years ago.

The two companies have had a close relationship for some time.

Zach Nelson, who has been CEO at NetSuite since 2002 and previously was Oracle’s vice president of worldwide marketing, says the deal will “accelerate our pace of innovation”.

The expansion of NetSuite’s business operations into Holland, Belgium and Luxembourg follows the opening of two European data centres late previous year: one in Dublin and the other in Amsterdam. Oracle will communicate all changes and transitions occurring after the close of the transaction well in advance through these familiar channels. And we think its stock price has almost unlimited room to run for early in-the-know investors!

In June, Oracle said revenue from its cloud-computing software and platform service accounted for 8 percent of overall revenue.

Oracle also has acquired companies such as Textura and Opower to increase its competitiveness in the cloud market. Oracle and its leading competitors, including Microsoft and IBM, are increasingly trying to beef up their cloud offerings. We believe Oracle was having the most success in converting existing SMB customers to its cloud-based ERP suite, while larger customers have abstained from migrating thus far over concerns about scalability and reliability.