Oracle will buy NetSuite for $12 billion

By on
Oracle will buy NetSuite for $12 billion

Strategic play to bolster cloud offerings.

Oracle will acquire rival NetSuite in a deal valued at US$9.3 billion (A$12.3 billion), in an effort to expand its presence in the cloud computing market.

NetSuite shares rose 18.6 percent to US$108.64 in pre-market trading, just shy of the offer price of US$109 per share.

Like rivals SAP and Microsoft, Oracle has focused on moving its business to a cloud-based model, providing on-demand services through subscription rather than selling installed software.

NetSuite, founded in 1998, pioneered the cloud computing revolution, Oracle said, creating the first company dedicated to providing business applications over the internet.

Oracle has recently acquired companies such as Textura and Opower to increase its competitiveness in the cloud market.

It expects the deal to immediately add to its adjusted earnings in the first full fiscal year after the transaction closes.

Oracle shares were up 1.6 percent at US$41.6 in pre-market trading.

"Oracle and NetSuite cloud applications are complementary, and will coexist in the marketplace forever," Oracle co-chief executive officer Mark Hurd said in a statement.

"We intend to invest heavily in both products – engineering and distribution."

The 18-year-old NetSuite has a market capitalisation of over US$7 billion and offers cloud-based ERP, accounting, and CRM platforms to its 30,000+ small to medium business customers.

Oracle has been working hard and fast in recent years to offset the decline in its traditional software business and battle competing web-based products offered by the likes of Salesforce and Workday, as well as the growing cloud businesses of rivals Microsoft and Amazon.

The company last month claimed it was aiming to be the first to reach US$10 billion in revenue from its cloud business.

It still has a way to go: its cloud income only represents a fraction of its total revenue, at US$2.9 billion out of a total US$37 billion for fiscal 2016.

With Reuters

Copyright © iTnews.com.au . All rights reserved.
Tags:

Most Read Articles

Log In

Username:
Password:
|  Forgot your password?