Oracle is trying to add some rocket fuel in the high-stakes race to dominate cloud services — and it’s doing so with a very familiar partner.
The software giant will pay $9.3 billion in cash to acquire NetSuite (N), a cloud computing company co-founded by Oracle executive chairmanLarry Ellison, its largest shareholder.
Oracle (ORCL) will pay $109 in cash per NetSuite share in the transaction, expected to close this year, a 19% premium to NetSuite’s closing share price of $91.57 Wednesday. NetSuite’s board has unanimously approved the deal, the company said.
Shares of NetSuite (N) rallied 18.4% Thursday to $108.41 after rising 9% Wednesday on speculation of a deal. Oracle (ORCL) shares rose 0.6% to $41.19.
Redwood Shores, Calif.-based Oracle has been attempting to make a rapid, costly pivot to cloud services as large rivals including Microsoft and Amazon — along with cloud-first companies such as Salesforce.com — make aggressive plays for corporate clients with cloud-based business offerings.
While cloud services revenue has been rising rapidly at Oracle, it hasn’t been able to offset the decline in software license revenue, its biggest business, as companies shift more of their activities to Internet- or cloud-based applications.
In NetSuite, Oracle gets the company that became the first to offer a full suite of enterprise resource planning applications, said Ray Wang, principal analyst and founder at Constellation Research.
It’s also buying a business with close ties to Oracle. Located in San Mateo, Calif., NetSuite was co-founded in 1998 by current NetSuite Chairman and Chief Technology Officer Evan Goldberg and Ellison as NetLedger, a cloud accounting company.
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