Oracle Set to Complete $9.3 Deal to Buy NetSuite
November 05 2016 - 2:03AM
Dow Jones News
By Jay Greene
Oracle Corp. announced that it had moved one step closer to
completing its $9.3 billion deal to buy NetSuite Inc. after
accumulating enough shares from the cloud-computing pioneer's
stockholders to approve the acquisition.
The deal has been complicated by opposition from NetSuite's
largest institutional shareholder, T. Rowe Price Group Inc. The
investment firm, which held 14.4 million NetSuite shares or 17.7%
of the company's outstanding stock as of Nov. 1, said in September
that it wouldn't tender its shares in support of the deal. It cited
the conflict of interest created by the substantial NetSuite
stockholdings by Oracle executive chairman Larry Ellison and his
family, saying the $109 a share price was too low.
Last week, T. Rowe sent a letter to a special committee of
Oracle's board, saying it would tender its shares in favor of the
deal if the software giant boosted is bid to $133 a share. Earlier
that week, Oracle Chief Executive Mark Hurd told CNBC that the
company's $109-a-share bid is its "best and final offer."
In a September regulatory filing, NetSuite said Mr. Ellison has
an "indirect beneficial ownership of approximately 39.5%" of
NetSuite's common stock. To address concerns about the conflict of
interest, Oracle and NetSuite agreed that the deal would close only
if owners of a majority of NetSuite shares not held by Mr. Ellison
and his family approve the transaction.
That gave independent NetSuite shareholders, such as T. Rowe,
significant clout in approving the deal.
The tender was originally set to close on Sept. 15. But Oracle
extended the deadline to Oct. 6 "to facilitate the completion of
outstanding antitrust reviews." T. Rowe's opposition led Oracle to
extend its deadline a second time last month, after receiving only
about a quarter of the shares necessary to complete the deal.
NetSuite's shares climbed close to $109 after the deal was
announced. But T. Rowe's opposition has dampened investor
enthusiasm. The shares fell below $90 on Wednesday to close at
$89.16. On Friday, the stock closed at $90.34. In a research note
sent to clients Thursday, Barclays analyst Raimo Lenschow wrote
that NetSuite shares could slide to between $60 and $80 if the deal
collapsed.
Both companies provide business applications that help automate
operations in various areas including finance and human resources,
collectively called enterprise-resource planning. Acquiring
NetSuite will boost Oracle's cloud-computing offerings, a market
segment where the company has been a laggard and is racing to add
new services.
Write to Jay Greene at Jay.Greene@wsj.com
(END) Dow Jones Newswires
November 05, 2016 01:48 ET (05:48 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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