Oracle to Acquire NetSuite to Enhance Its Cloud Portfolios

With this acquisition, the position of Oracle Corporation will further strengthen in the domain of cloud-based back end automation software applications.

Oracle  It was announced by the Oracle Corporation this weekend that it is going to acquire the NetSuite Inc, a well known company that offers cloud based software for backend process automation services. While informing about the financial terms and conditions of the deal, it was announced that the deal was sealed for $9.3 billion. The payment will be cleared in cash.

It is very important to note that Oracle Corporation is aggressively pursuing to gain a substantial share in the fastest growing cloud computing domain of business.

With this announcement, the share prices of NetSuite soared high with a substantial increase of about 18% in its current value. The shares were trading at about $108.07 at the mid of the trading day. Meanwhile, there was no significant impact of this acquisition on the share price of Oracle Corporation. They were trading at their stable position of about $40.93 per share.

In recent years, it has been found that many large IT companies have been aggressively shifting toward cloud computing services due to heavy demand and substantial potential in the market. In the pursuit of the cloud business enhancement, Oracle has been competing with its competitors like Salesforce, SAP, WorkDay Inc and others to offer the process automation and other software products. With this merger of NetSuite, Oracle will be able to compete in this domain more aggressively to achieve the business objectives.

While talking about the prices of this deal, Rodney Nelson, a market analyst of MorningStar research and analysis firm said, “It’s definitely pricey from Oracle’s perspective, but it’s understandable and it’s justifiable, especially in this environment, when we’ve seen software-as-a-service companies go as high as 10, 11, 12 times sales”. Similarly, other market experts also believe that the price of the deal is on the higher side.

In an analytical note, the Jefferies Market Research said, “This acquisition will yield immediate fruits for the Oracle to benefit from the mid size software marketplace, but the price paid seems steep.”

It is very important to note that Oracle has already acquired a couple of other companies operating in the domain of cloud business. Among such companies, Opower, Textura are a few very important to note.

Many experts are seeing it as an increase in the competition of cloud business in near future.