Larry Ellison’s Oracle is bulking up on its software offerings again with a new software company acquisition. The company today announced that it has entered into a definitive agreement to acquire MICROS Systems Inc. a provider of integrated software and hardware solutions to the hospitality and retailing industries, and publicly listed on Nasdaq.
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Oracle has agreed to pay US$68.00 per share in cash to acquire MICROS’s 74.8 million currently outstanding shares, plus an additional approximately 3 million vested issuable shares of management. Altogether the transaction in total is valued at approximately $5.3 billion, gross, i.e. before netting about US$700 million of cash sitting in the acquired company’s balance sheet. The acquisition price is about US$10 per share above MICROS’s recent trading level immediately before the acquisition was announced.
The MICROS Board of Directors has unanimously approved the deal, and it is expected to close in the second half of 2014, subject to their stockholders tendering a majority of the company’s diluted outstanding shares, certain regulatory approvals and other customary closing conditions.
Mark Hurd Co-President of Oracle said of the acquisition, “Oracle has successfully helped customers across multiple industries, harness the power of cloud, mobile, social, big data and the internet of things to transform their businesses, ” and he added, “We anticipate delivering compelling advantages to companies within the hospitality and retail industries with the acquisition of MICROS.”
Peter Altabef, President and CEO of MICROS commented, “MICROS has been focused on helping the world’s leading brands in our target markets since we were founded in 1977, including running more than 330, 000 sites across 180 countries today, ” adding “In combination with Oracle, we expect to help accelerate our customers’ ability to innovate and differentiate their businesses by utilizing Oracle’s technologies, cloud solutions and scale. We are very excited about the great opportunities this will create for our customers and employees.”
Oracle intends to keep MICROS’ management and employees as a dedicated business unit within Oracle, to precisely maintain its customer focus, even after the deal closes.
Oracle’s other co- President, and CFO, Safra Catz said, “We expect this transaction to be immediately accretive to Oracle’s earnings on a non-GAAP basis and to expand over time.”
For Oracle this deal comes as a well-timed diversion from its recently announced disappointing quarterly earnings, where it reported a 4% year on year fall in earnings.
In formal terms Oracle will now prepare a tender offer, and file tender offer materials with the SEC upon commencement of the tender offer. At the time the tender is commenced, MICROS will file a solicitation statement recommending acceptance by its shareholders.
Oracle has already acquired almost a dozen separate companies in the last two years, seeking to bulk up its cloud offerings across the board and shore up its more traditional enterprise data base products. Nevertheless the deal to acquire MICROS is its largest transaction since buying up Sun Microsystems five years earlier in 2009.