Oracle Corp.’s share price up, to acquire Micros Systems Inc. for 5.3 billion dollars to diversify its portfolio

June 23, 2014 2:21 pm

Oracle Corp. made an official statement today revealing that it reached an agreement to acquire Micros Systems Inc. in a deal estimated at 5.3 billion dollars. The takeover comes at a time when Mr. Larry Ellison, who is the current Chief Executive Officer of the company has been struggling to improve the slowing sales growth of the company by adding software for hotels and restaurants in Oracle’s portfolio.

The deal, which was announced on Monday, is considered the largest one in the history of Oracle Corp. since the 2010 takeover of Sun Microsystems Inc. for 7.4 billion dollars. The purchase would provide Oracle with the chance to expand its portfolio and respectively, expand reach thanks to the fact that Micros Systems Inc. offers software that is used primarily by retailers and hospitality providers.

One of the analysts, who work at Barclays Capital Inc. – Raimo Lenschow commented in a note to customers on June 17th, which was cited by Bloomberg: “Such an acquisition would be a net positive for Oracle, as the company continues to round out its commerce platform by adding high quality, growth assets at reasonable valuations.”

Under the terms of the acquisition, Oracle is expected to pay 68 dollars per share, which is a 18% premium above the trading price of Micros’ shares before last week’s announcement of the potential deal. The all-cash takeover of Micros Systems Inc. is expected to be finalized over the second half of the year, according to Oracle’s statement.

The U.S.-based Oracle came close to purchasing Micros about six years ago, but the acquisition fell apart at the last moment. Over the last ten years, Oracle has been focused on a series of takeover deals by acquiring about 100 companies for about 50 billion dollars, reaching for worldwide expansion.

Oracle Corp. was 1.1% to trade at 41.27 dollars per share in New York, marking a one-year change of +36.95%. According to the information published on CNN Money, the 34 analysts offering 12-month price forecasts for Oracle Corp. have a median target of 45.00, with a high estimate of 50.00 and a low estimate of 28.00. The median estimate represents a +10.24% increase from the last price of 40.82.

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