- Oracle completed the acquisition of NetSuite, showing disciplined behavior by insisting on its initial offer.
- The deal fits well into Oracle's strategy of promoting its cloud products at the expense of on-premise products.
- The average target price of top analysts is at $44.17, an upside of 10%, which appears reasonable.
On November 5,
T. Rowe had about a 13% stake in NetSuite before the deal, the largest holdings after Oracle's Chairman Larry Ellison who owned about 40% of NetSuite shares. Although Oracle's offer represented a premium of 19% on NetSuite's closing stock price of $91.57 on the day before the bid, T. Rowe was of the opinion that the NetSuite shares were worth more. However, Oracle showed a disciplined behavior insisting on the initial offer, which it considered fair value, and after receiving approval from a majority of the unaffiliated shares of NetSuite (excluding Mr. Ellison's shares), the deal was closed.
As I explained in my previous article, the acquisition fits well into Oracle's strategy of promoting its cloud products at the expense of on-premise products. NetSuite has developed a single system for running a business in the cloud for 18 years, and the deal will give Oracle a better...