MKM Partners’ Kevin Buttigieg says The Ultimate Software Group, Inc.
Moreover, the Buy-rated Ultimate Soffware itself is speculated to be Oracle’s takeover target, in addition to ServiceNow Inc
The analyst believes NetSuite shares would fall to the low $70’s range if the deal collapses.
“So potential share downside from $90 (22 percent) appears relatively balanced with potential upside to $109 (21 percent) though the short term binary nature of this event will likely make it unsuitable for many investors, in our view,” Buttigieg wrote in a note.
Meanwhile, the final extension for Oracle's
Further, T. Rowe Price, who holds about 35 percent of the unaffiliated shares, cannot prevent the deal by itself and other shareholder has publicly opposed the deal. As such, the analyst believes the likelihood of the deal closing is likely better than 50 percent.
Although T. Rowe Price is demanding $133 a share, Oracle may not want to risk itself by raising the offer as it would set a precedent for the shareholders of its future targets to claim a higher second offer.
“[A]t 9x EV/sales, it is hard to argue that the offer undervalues N relative to other SaaS acquisitions (T. Rowe's case is based in large part on its perceived unique value of N to ORCL),” Buttigieg highlighted.
The analyst has a Neutral rating on
At time of writing, shares of NetSuite were almost flat at $89.19, while Oracle is up 0.52 percent to $38.23. Ultimate Software stock fell 0.72 percent to $209.02.
|Sep 2016||RBC Capital||Maintains||Outperform|
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