Oracle Buys NetSuite in Deal Valued at About $9.3 Billion

By WeathersfieldTM

(Bloomberg) — 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 percent 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 the likes of Salesforce.com Inc. and Microsoft Corp.

"Oracle and NetSuite cloud applications are complementary, and will coexist in the marketplace forever," said Oracle co-Chief Executive Officer Mark Hurd in a statement Thursday. "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 co-Chief Executive Officer, Safra Catz said.

Founded in 1998, NetSuite, with a market capitalization 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 percent of NetSuite’s common stock, according to a company filing. Ellison has “control over approval of significant corporate transactions,’’ according to the filing.

Oracle shares jumped 1.8 percent to $41.66 in premarket trading. NetSuite shares surged 18.4 percent to $108.46.