Oracle Corp said it would buy Micros Systems in a $5.3 billion deal as the world’s No.2 business software maker looks to boost flagging growth through acquisitions.<\/p>\n
The purchase of Micros, which makes point-of-sale hardware and software for restaurants and hotels, is the first multi-billion dollar acquisition by Larry Ellison-led Oracle in five years and follows disappointing fourth-quarter results.<\/p>\n
Analysts said the acquisition could be first in a string of deals for Oracle, which has been stung by aggressive pricing by companies such as Salesforce.com Inc and Workday Inc for their software and internet-based products.<\/p>\n
“I think this is really Larry Ellison looking in the mirror realizing the need to get aggressive yet again on M&A,” FBR Capital Markets analyst Daniel Ives told Reuters.<\/p>\n
“It is clear to us that the company needs to quickly put more ‘growth fuel in its engine’ to catalyze growth in the top-line,” Ives said.<\/p>\n
The Micros deal fits with Oracle’s plan to expand its fast-growing cloud business, where it has been a late entrant.<\/p>\n
Micros sells internet-connected cash registers and provides a host of cloud-based services such as e-commerce and customer relationship management to hotels and restaurant chains, including Louvre Hotels, TGI Friday’s and Yum Brands Inc .<\/p>\n
Micros’ full-year revenue rose 15 percent to $1.27 billion in the year ended June 2013.<\/p>\n
Oracle’s spree of acquisitions has slowed of late. Micros is the company’s largest acquisition since its $5.6 billion purchase of Sun Microsystems in 2009.<\/p>\n
“I believe it’s just the beginning of a massive M&A cycle for Oracle where we could see them spending $15-$20 billion in acquisitions over the next one to two years,” Ives said.<\/p>\n
He reckons the deals will be focused on cloud, big data as well as cyber security.<\/p>\n
The company had $38.8 billion of cash and short-term investments as of May 31, positioning it for more deals.<\/p>\n
Oracle said on Monday it offered Micros shareholders $68 per share, representing a premium of 3.4 percent to the stock’s Friday close.<\/p>\n
Micros shares were trading at $67.97 on Monday afternoon. Up to Friday’s close, they had risen 14 percent since Bloomberg reported on June 17 that the companies were in talks.<\/p>\n
Ives said the Micros deal could help Oracle stave off threat from e-commerce software providers such as Demandware Inc and NetSuite Inc .<\/p>\n
Oracle said the transaction is expected to add to earnings immediately.<\/p>\n
Wedbush analyst Steve Koeing estimated the deal would add about 3-4 percent to Oracle’s revenue and add 3 cents to 4 cents per share to its earnings on a twelve-month basis.<\/p>\n
Oracle’s shares were up 0.7 percent at $41.09.<\/p>\n
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