Oracle is buying business software firm NetSuite in a $9.3-billion deal

Oracle is buying business software firm NetSuite in a $9.3-billion deal
Oracle Chairman Larry Ellison also owns a large stake in NetSuite. (Toru Yamanaka / AFP/Getty Images)

Oracle Corp. is buying cloud software company NetSuite Inc. in a deal valued at $9.3 billion, combining two Silicon Valley firms that count Larry Ellison as a top shareholder.

Both companies provide enterprise-resource planning software, or systems that streamline business operations such as inventory management, accounting and human resources.


Oracle Chief Executive Mark Hurd said the companies' cloud applications complement each other. "We intend to invest heavily in both products — engineering and distribution," he said Thursday in a statement.

NetSuite, based in San Mateo, is a leader in the subscription-based, on-demand variety of such software. Oracle, based in nearby Redwood City, is one of the nation's largest software companies. According to FactSet, Ellison owns a 27% stake in Oracle, where he is chairman, and a 40% stake in NetSuite.

Under the deal, NetSuite stockholders are to receive $109 a share, a 19% premium over the Wednesday closing price of $91.57.

The transaction is expected to close this year.

Such deals aimed at combining complementary services are one reason that technology currently leads the mergers-and-acquisitions sector.

So far this year, there have been more than 5,000 tech deals announced worldwide valued at a combined $355 billion, by far the largest merger activity of any industry, according to the research firm Dealogic.

The NetSuite deal continues a spate of acquisitions by Oracle. In recent months, the software giant acquired Opower Inc. and Textura Inc., which make cloud software for the utility and construction industries, respectively. Each of those deals was valued at more than $500 million.

It also paid $5.3 billion in 2014 for Micro Systems Inc., a maker of Internet-connectable cash registers.

"This NetSuite transaction is a bit different," said Jack Andrews, vice president and senior research analyst at D.A. Davidson & Co.

"On the last earnings call, Ellison was talking about how it's a stretch goal for the company to be the first software company to reach $10 billion in revenue. This acquisition of NetSuite is going to get them closer to that goal," he said. "NetSuite has dealt with more mid-market opportunities and smaller businesses."

Oracle shares rose 0.6% to $41.19 on Thursday. NetSuite's stock jumped 18.4% to $108.41.

Times staff writer James F. Peltz contributed to this report.




1:30 p.m.: This article was updated with stocks' closing prices.

10:55 a.m.: This article was updated with background information about tech mergers and more recent stock prices.

9:25 a.m.: This article was updated throughout with Times staff reporting.

This article was originally published at 6:35 a.m.