Oracle Corp. (NYSE:ORCL) announced Thursday morning that it would acquire NetSuite Inc. (NYSE:N) in a deal valued at approximately $9.3 billion, or $109 per share of N, in an effort to expand into the rapidly-growing cloud market.
Like its rivals SAP SE (TO:SAP) and Microsoft Corp. (NASDAQ:MSFT) , Oracle has focused on moving its business to the cloud-based model, essentially providing its services remotely via data centers rather than selling installed hardware.
NetSuite, founded in 1998, was a pioneer in the cloud computing revolution, as it was the first company dedicated to providing business applications over the internet. In addition to NetSuite, Oracle has also acquired companies such as Texture and Opower to increase its competitiveness in the cloud market.
“Oracle and NetSuite cloud applications are complementary, and will coexist in the marketplace forever, Oraclr CEO Mark Hurd said in a statement, adding that “We intend to invest heavily in both products- engineering and distribution.”
The deal is expected to close in 2016, subject to regulatory approval and NetSuite shareholders. Oracle said it expects the acquisition to be “immediately accretive” to earnings on a non-GAAP basis in the year after the deal closes.
Oracle is currently a Zacks Rank #3 (Hold), and shares of the company are up over 12% year-to-date. NetSuite is also currently a Zacks Rank #3 (Hold), and shares of the company are up nearly 28% year-to-date. Shares of NetSuite jumped more than 18% to around $108 per share, just below the Oracle acquisition price, on news of the deal.
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