Oracle acquires Netsuite in $9.3bn deal

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Summary: Oracle CEO Mark Hurd called Oracle and Netsuite 'complementary' cloud applications.

Oracle has announced it is acquiring cloud-based ERP provider Netsuite for $9.3bn in cash, or $109 per share."Oracle and NetSuite cloud applications are complementary, and will coexist in the marketplace forever," said Oracle co-CEO Mark Hurd. "We intend to invest heavily in both products -- engineering and distribution."

Oracle's ties to Netsuite go back to the 1990s, when Netsuite CEO Zach Nelson served as Oracle's marketing chief. Oracle founder Larry Ellison is Netsuite's largest investor, and both companies have had a keen focus on the enterprise resource planning space.

But while Netsuite has lived and breathed in the cloud since its inception, Oracle has struggled to transition to an all-cloud business model. Adding Netsuite to the fray, with its subscription-based, on-demand computing chops, will certainly help on this front and give Oracle additional muscle in the battle for cloud revenue.

"Oracle, as with every cloud vendor, is seeking to grow their subscription revenues. Netsuite brings almost 800 million in revenue and grows the overall market share," said Ray Wang, principal analyst and founder of Constellation Research. "Moreover, Larry [Ellison] keeps Netsuite in the family to avoid competitors from encroaching on the Oracle market."

Netsuite also helps Oracle fill in cloud gaps across key verticals, namely manufacturing, retail, commerce, and professional services, all of which are areas Oracle still addresses with an on-premises model. Netsuite stands to benefit from Oracle's global scale and technical assets. Netsuite's CEO added that he is "excited to join Oracle and accelerate our pace of innovation".

Oracle said the deal is expected to close in 2016, subject to regulatory and shareholder approval. It is one of Oracle's largest acquisitions so far this year. In May, Oracle bought Textura, makers of contract and payment cloud services for the construction industry, in a deal valued at $663m.
Less than a week later, Oracle bought software-as-a-service company Opower for approximately $532m, meaning the legacy company spent roughly $1.2bn in three (business) days on cloud acquisitions.

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