Oracle offers to buy NetSuite for $9.3b

Deal will help software giant shift more sales to cloud-based products that have great demand

Oracle Corp. gave its cloud-services strategy a big boost by offering to buy NetSuite Inc. in a deal valued at about $9.3 billion.

Oracle, which sells software to big corporations, has been trying to shift more sales to cloud-based products increasingly demanded by its customers. New cloud services made up about 8 per cent of the company’s total sales during its fiscal fourth-quarter. Buying NetSuite — whose products include customer relationship management software — will help Oracle compete against Salesforce. com Inc. and Microsoft Corp.

“Oracle and NetSuite cloud applications are complementary, and will coexist in the marketplace forever,” said Oracle co-CEO Mark Hurd yesterday. “We intend to invest heavily in both products — engineering and distribution.”

The deal, which offers $109 per share in cash for NetSuite, will be “immediately accretive to Oracle’s earnings” on an adjusted basis, in the full fiscal year after closing, Oracle coCEO Safra Catz said.

As of March, Oracle cofounder Larry Ellison and his family owned about 45.4 per cent of NetSuite’s common stock, according to a company filing. Ellison has “control over approval of significant corporate transactions”. Oracle shares jumped 1.8% to $41.66 in premarket trading and NetSuite’s 18.4% to $108.46. Founded in 1998, NetSuite, with a market capitalisation of $7.37 billion, sells cloud business software including customer relationship management and e-commerce tools. In May, the company unveiled software that unifies various accounting functions — for example, billing, revenue recognition, orders and subscriptions — into one system. NetSuite has more than 30,000 customers, the bulk of which are small and mid-size companies.

As of March, Oracle co-founder Larry Ellison and his family owned about 45.4 per cent of NetSuite’s common stock.