US cloud and software major Oracle on Thursday announced it was acquiring enterprise cloud services company NetSuite for nearly $9.3 billion in an all-cash deal - a move that will cement Oracle in the growing cloud business globally and expand its customer base.
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"Oracle and NetSuite cloud applications are complementary, and will coexist in the marketplace forever. We intend to invest heavily in both products -- engineering and distribution," said Mark Hurd, Chief Executive Officer, Oracle, in a statement.
"We expect this acquisition to be immediately accretive to Oracle's earnings on a non-GAAP (Generally accepted accounting principles) basis in the first full fiscal year after closing," added Safra Catz, Chief Executive Officer, Oracle.
The evaluation and negotiation of the transaction was led by a special committee of Oracle's Board of Directors consisting solely of independent directors.
The transaction is expected to close this year.
NetSuite claims a dominant position in the cloud enterprise resource planning (ERP) space.
"NetSuite has been working for 18 years to develop a single system for running a business in the cloud," said Evan Goldberg, Founder, Chief Technology Officer and Chairman, NetSuite. "This combination is a winner for NetSuite's customers, employees and partners."
The ERP industry is on the rise and Oracle recently acquired smaller companies, including Opower and Textura.
In a bid to provide a more secured cloud experience to its customers, software and cloud major Oracle recently announced to bring the advanced security, efficiency and simplicity of its SPARC (Scalable Processor Architecture) platform to the cloud.
Oracle's state-of-the-art SPARC M7 microprocessor is the world's first silicon-based memory intrusion detection and a high-speed encryption chip.
"The two organizations will complement each other well and this arrangement as of now appears to be a good move to leverage the market with the synergy generated by both organizations. In addition, Oracle will be able to expand its customer base," said D.D. Mishra, Research Director at global market research firm Gartner.
The emerging markets have strong demand for ecommerce and CRM (Customer Relationship Management) suites and this will make the market more competitive.
"We see a growing shift towards SaaS (Software as a Service) and this business is expected to grow fast. Globally, we see almost 18.8 per cent CAGR (Compound annual growth rate) growth of SaaS between 2015-2020. Many businesses will leverage this situation and strengthen SaaS portfolio," he added.
In India, this market is expected to change much more rapidly at CAGR 25.6 per cent between 2015-2020.
In a bid to cater to the needs of organizations that seek independence and security while transitioning to the cloud to reap its potential benefits, global software major Oracle recently launched a service in India to bring its public cloud in customers' data centers.
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The new suit of offerings is called Oracle Cloud and involves a server managed and maintained by Oracle. It runs on-premises (in the customer's data centre) and behind the firewall of the client allowing the chief information officers to easily move business critical applications to cloud.