Oracle Corp. continued its march to the cloud this week with a $9.3 billion acquisition of NetSuite, Inc. Mainstream media focused most of its coverage on the conflict of interest due to Larry Ellison’s large holdings in both companies, which is noteworthy, but there’s much more to the story, in my view.
First, as an Oracle spokesperson said, the only way Oracle and NetSuite could have avoided this conflict is to have not done a deal. While it’s true that no matter what price Oracle paid, people would question the deal. Some were concerned that the lack of other bidders (due to the premium) could be a headwind for the deal. Regardless, the real interesting angle to me is that Ellison funds companies as a way to: 1) invest and get returns; 2) catalyze new markets that Oracle might struggle to build organically and 3) de-risk a potential acquisition. I look at it as paying a premium for a proven free agent in basketball. If the player performs the buyer typically wins.
So Oracle in this case is betting that NetSuite will perform to justify the substantial premium. Nonetheless, Oracle says the acquisition will be accretive.
An obvious question to ask is the following: If Oracle is doing so well in cloud, why does it need NetSuite? NetSuite does ERP. Oracle does ERP. So why the deal?
Why did Oracle really buy NetS
Source:-siliconangle
Viewmore:-Punjab Mobile Number Database
First, as an Oracle spokesperson said, the only way Oracle and NetSuite could have avoided this conflict is to have not done a deal. While it’s true that no matter what price Oracle paid, people would question the deal. Some were concerned that the lack of other bidders (due to the premium) could be a headwind for the deal. Regardless, the real interesting angle to me is that Ellison funds companies as a way to: 1) invest and get returns; 2) catalyze new markets that Oracle might struggle to build organically and 3) de-risk a potential acquisition. I look at it as paying a premium for a proven free agent in basketball. If the player performs the buyer typically wins.
So Oracle in this case is betting that NetSuite will perform to justify the substantial premium. Nonetheless, Oracle says the acquisition will be accretive.
An obvious question to ask is the following: If Oracle is doing so well in cloud, why does it need NetSuite? NetSuite does ERP. Oracle does ERP. So why the deal?
Why did Oracle really buy NetS
Source:-siliconangle
Viewmore:-Punjab Mobile Number Database
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