Oracle to Close $9.3 Billion Deal for SaaS Provider NetSuite

The enterprise software vendor got the necessary shares it needed by the Nov. 4 deadline to move forward with the acquisition.

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Oracle is finally getting its hands on NetSuite, a move designed to bolster the enterprise software giant's high-profile cloud ambitions and give it greater access to the important midmarket space.

Oracle officials said in a statement early Nov. 5 that enough shares of NetSuite had been tendered to enable Oracle to move forward with the $9.3 billion acquisition, adding that the deal will close Nov. 7. The announcement of the deal this weekend came as the Nov. 4 deadline that Oracle had set was passing.

There had been ongoing speculation that Oracle may buy NetSuite in a move to add to its software-as-a-service (SaaS) capabilities. The company made its bid official in July, but it ran into resistance from some institutional shareholders, in particular T. Rowe Price, NetSuite's largest independent investor. Officials with the investment firm reportedly were concerned about perceived conflicts of interest given the close relationship between Oracle founder, Chairman and CTO Larry Ellison and NetSuite CEO Zack Nelson, who in the 1990s led marketing efforts for Oracle. In addition, Ellison, through various entities, owns more than 40 percent of NetSuite's stock.

Most recently, T. Rowe Price officials pushed to have Oracle increase its offer from $109 to $133 per share, a move that would add about $2 billion to the price.

However, Oracle CEO Mark Hurd last week said during an interview on CNBC that the company had no interest in increasing its offer, saying instead that it was setting a deadline of Nov. 4 for shareholders to accept the $9.3 billion deal and that he and other executives were ready to walk away from it if investors chose not to sell their stakes to Oracle.

"It's done from our perspective," Hurd said of the proposal. "It's our best and final offer."

T. Rowe Price officials in September had informed NetSuite executives that the investment firm was going to oppose the deal, and reports said that by Oct. 6, Oracle had only 22 percent of the shares it needed to complete the acquisition. Part of the offer from Oracle called for the majority of NetSuite's outstanding shares not owned by executive officers or directors of NetSuite or by people affiliated with Ellison, his relatives or affiliated entities to be tendered.

T. Rowe Price officials reportedly told Oracle's board of directors that it was still resisting selling their shares to Oracle at the $109-per-share price, saying that the higher price made more sense. Still, Oracle officials said in their statement Nov. 5 that more than 53 percent of the shares have been tendered.

The software maker is looking to become a cloud player on the level of Amazon Web Services, Microsoft and Salesforce.com, and have aggressively been growing the company's cloud capabilities, particularly in the areas of SaaS and platform-as-a-service (PaaS). In October, the company unveiled the Oracle Bare Metal Cloud Services offering, a move designed to expand its presence in the infrastructure-as-a-service (IaaS) area of the cloud.

NetSuite, along with Salesforce, SAP, Microsoft and Workday, is among the major players in the SaaS space, offering cloud-based back-office software like enterprise resource planning (ERP).