Oracle buys cloud vendor NetSuite for US$9.3 billion

Redwood Shores, Calif. enterprise software vendor Oracle Corp. is acquiring the cloud-based enterprise resource planning (ERP) software firm NetSuite Inc. for US$9.3 billion in cash, it announced on Thursday morning.

In a press release Oracle CEO Mark Hurd described the deal as one between two complementary software services. Both software offerings will coexist and Oracle plans to “invest heavily” in both products.

Oracle, an on-premises software player that has often served as the antithesis for’s Marc Benioff’s evangelizing of cloud software, gains an immediate cloud presence and the recurring subscription revenue that comes with it. Netsuite’s revenue sits at about $800 million annually, according to Constellation Research.

“Netsuite gives the Oracle customer an integrated cloud ERP, CRM, and commerce suite,” writes Ray Wang, principal analyst at Constellation Research. “NetSuite’s core has been strong in manufacturing, retail, commerce, and professional services… NetSuit’s cloud approach fills holes in Oracle’s cloud strategy in key verticals.”

Oracle has a good history with integrating its acquisitions, as seen most recently with cloud marketing vendor Eloqua, along with BlueKai, Compendium, and Responsys being combined to create the Oracle Marketing Cloud. Though it’s more likely that NetSuite’s end-to-end cloud suite targeting the mid-market will continue to operate independently, Wang writes.

“Customers should try to renew more favourable terms before Oracle’s acquisition in order to sign more beneficial contracts,” he writes.

In a FAQ provided with the announcement, Oracle and NetSuite say the deal makes sense because NetSuite’s customers “represent potential current and future buyers of Oracle’s entire portfolio of technologies.”  The idea that NetSuite’s current set of products will avoid a post-integration axe is further bolstered with Oracle stating “Oracle and NetSuite cloud applications are complementary and will coexist in the marketplace forever.”

Oracle also addresses NetSuite’s partner community, saying it will continue to support them and that partners should continue to use existing contracts with NetSuite for immediate and ongoing needs.

NetSuite is also no stranger to making acquisitions itself. The San Mateo, Calif.-based firm most recently acquired IQity, a manufacturing software firm for an undisclosed amount. In 2013, Netsuite acquired Waterloo, Ont.-based TribeHR, a cloud-based HCM software startup.

IT World Canada requested interviews with Oracle and NetSuite. Oracle declined further content. NetSuite hasn’t responded at time of publication. The deal is expected to close before the end of the year, and still must receive regulatory approvals as well as pass the grade with NetSuite shareholders. Until then, the companies continue to operate separately.

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Brian Jackson
Brian Jackson
Former editorial director of IT World Canada. Current research director at Info-Tech

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