Oracle Corp agreed to buy Micros Systems Inc for US$5.3 billion, as chief executive officer Larry Ellison seeks to reignite slowing growth by adding software for hotels and restaurants.
Micros stockholders will get US$68 a share in cash, 18 percent more than the closing price on Monday last week, a day before Bloomberg reported the companies were near a deal. Net of Micros’s cash, the value is US$4.6 billion, Oracle said in a statement on Monday.
The Redwood City, California-based software maker came close to acquiring Micros six years ago only for the deal to fall through at the last minute.
Oracle, which has acquired about 100 companies in the past decade, has seen the incremental revenue gains accrued through those deals dry up. After a late entry to the cloud-computing market, sales have declined or gained less than 5 percent in each of the past 11 quarters as customers gravitate to rivals selling Internet-based software. Last week, Oracle posted profit and sales that missed analysts’ estimates.
“Micros gives them a strong foothold in the hotel and hospitality industry,” said Richard Williams, an analyst at Summit Research Partners LLC in Summit, New Jersey, who recommends holding Oracle’s stock.
“That will be an important asset for them and will tie well into their other systems such as their engineer systems and cloud-related offerings,” he said.
The deal, expected to close in the second half of the year, is expected to add to Oracle’s earnings immediately, excluding some items, chief financial officer Safra Catz said in the statement.
The acquisition would be Oracle’s largest since the US$5.7 billion takeover of Sun Microsystems Inc in 2010, data compiled by Bloomberg show.
FBR Capital Markets analyst Daniel Ives expects more acquisitions after the Micros purchase.
“It’s clear they need to do deals on the horizon in order to accelerate growth,” said Ives, who rates Oracle’s shares outperform. “They were late to the cloud.”
Oracle has almost US$39 billion of cash and marketable securities, Catz said on a conference call last week.
Based in Columbia, Maryland, Micros sells point-of-sale systems for hotels, restaurants and retailers.
Six years ago, Micros chairman Tom Giannopoulos, who was CEO at the time, flew from Maryland to California to sign a deal with Oracle, only to have the transaction fall through, according to one person with knowledge of the matter.
Dealmaking in the technology space is accelerating as established software companies try to navigate the shift to cloud computing and fend off challenges from new competitors. This month, SanDisk Corp agreed to buy Fusion-io Inc, which provides storage to Facebook Inc and Apple Inc, for about US$1.1 billion.
Oracle has long been an acquisition machine under Ellison, who is worth US$46.6 billion and ranks eighth on the Bloomberg Billionaires Index. He led Oracle Team USA to victory in the America’s Cup last year and agreed in 2012 to buy most of the Hawaiian island of Lanai for an undisclosed sum.
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