WASHINGTON—US software giant Oracle said Saturday that it has sealed its $9.3-billion acquisition of cloud computing company NetSuite.
Oracle said that a majority of shares—53 percent—owned by eligible stockholders in the vote had been tendered. The acquisition is to be completed Monday, the company said in a statement.
The takeover agreement was announced in late July at a price of $109 per share, but it attracted criticism because Oracle executive chairman Larry Ellison and his family own a major stake in NetSuite of nearly 40 percent.
Under conditions of the deal, the transaction had to be approved by a majority of small, independent NetSuite shareholders, which excluded Ellison.
The deal allows Oracle to incorporate NetSuite’s cloud-based financial management and resource planning products, strengthening its tools in the cloud.
For the 2017 fiscal first quarter ended August 31, Oracle reported total revenues of $8.6 billion, up two percent from a year ago. Total cloud revenues shot up 59 percent to $969 million.
NetSuite shareholders endorsed Oracle’s bid for the software provider, clearing the path for the $9 billion acquisition after weeks of conflict between a large investor and executives over the price tag.
The approval comes after T. Rowe Price, which recently held about 18 percent of the stock, publicly pushed back against the offer of $109 per share, saying $133 would be a fairer price. An Oracle executive had said the offer was final. The decision came from shareholders other than Ellison and related parties who hold about 45 percent of NetSuite, along with executive officers and directors.
Oracle is counting on NetSuite to help the company’s shift to cloud-based services and better compete with rivals such as Salesforce.com Inc. and Microsoft Corp. NetSuite is one of the largest pure providers of these modern software features, having carved out a leadership position in the market for tools that manage customers’ core financials.
The tendered shares do not include more than 1 million separate shares tendered pursuant to the guaranteed delivery procedures set forth in the offer to purchase, the company said.
NetSuite had come under pressure amid the uncertainty with the acquisition, Jack Andrews, an analyst at D.A. Davidson, said in a note late last month. Indeed, sales rose 26 percent in the third quarter, falling short of estimates. It also was a slowdown from recent quarters when revenue expanded more than 30 percent.
For Oracle, the deal came at a crucial time. The shift to the cloud is a key part of its growth plan, as more customers demand software delivered over networks instead of installing programs on their own servers. While cloud revenue in the fiscal first quarter rose 59 percent, the company’s total sales declined 1.7 percent, falling short of estimates.
The agreement, first unveiled in July, was expected to be accretive to earnings. It wasn’t a typical acquisition process, given Ellison’s holdings in NetSuite. He was an early investor in the company.
