Oracle Corp. has decided to acquire NetSuite Inc. in a transaction valued at $9.3 billion, in an effort to expand its computing offerings as it tries to catch up with rivals. NetSuite shares hit a new 52-weeks high of $108.32 in the mid-day trading session following the news.
The software maker is paying $109 in cash for NetSuite. The price represents a premium of 19 percent from NetSuite’s closing price of $91.57 on Wednesday. The agreement is expected to close by the end of this year, subject to the approval of regulators and investors.
The agreement will reunite Chairman Larry Ellison with NetSuite’s chief executive Zach Nelson, who led Oracle’s marketing operations way back in the 1990’s. Moreover, Ellison is the biggest stakeholder of NetSuite—entities owned by Ellison and his family possessed about 40 percent NetSuite shares, according to the annual proxy statement filed by NetSuite in April.
The two companies offer applications for operating a business named enterprise-resource planning software. However, NetSuite is among the leaders in delivering those offerings to clients through subscription-based, on-demand computing.
Oracle reported that it is looking forward to make heavy investments in both products, and that the agreement would instantaneously add to its profit, on an adjusted basis.
The company has made improvements in its homegrown cloud products, though it is competing with rivals including Salesforce.com and Workday Inc., which offer software and storage exclusively on the web. Oracle is also trying hard to keep pace with big companies including Amazon.com Inc., and Microsoft Corp.
In recent months, Oracle has spent more than $1 billion to acquire Opower Inc., which develops cloud software for the utility industry, as well as Textura Corp. that offers similar services for businesses associated to the construction industry. Two years ago, Oracle acquired Micros Systems Inc. in a transaction valued at $5.3 billion, one of the biggest multibillion deals in recent years.