Reportedly, Oracle Corp. (ORCL - Free Report) is planning to acquire MICROS Systems for approximately $5.0 billion. However, neither of the companies has confirmed the deal as yet. Shares of MICROS surged 14.9% ($8.62) to $66.33 following the news.
MD -based MICROS manufactures and sells point of sale hardware, software, and services to restaurant, hotel, hospitality, specialty retail markets and other similar markets. MICROS generated revenues of $1.29 billion in fiscal 2013 and is projected to generate revenues of $1.37 billion in fiscal 2014.
We believe that the potential acquisition will be a major positive for Oracle. It will enable the company to fight competition from the likes of Demandware Inc. and Netsuite Inc. as well as enable it to solidify its position as a software-as-a-service e-commerce vendor.
Also, this deal, provided it matures, will be the biggest for Oracle since it acquired Sun Microsystems in 2010 for a sum of $7 billion. Reportedly, some of Oracle’s competitors like SAP and International Business Machines Corporation (IBM - Free Report) may offer a higher bid in order to raise the price.
Per reports, about six years back, Oracle wanted to acquire MICROS but the deal did not materialize due to some unknown reasons.
Of late, Oracle has been on an acquisition spree in order to diversify its offerings. The company has spent about $50 billion to acquire 100 companies during the last 10 years. Out of these, 20 odd had been geared toward specific industries. In Dec2013, Oracle agreed to buy marketing-software maker Responsys Inc. for about $1.5 billion to court chief marketing officers.
We believe that Oracle, being a late entrant to the cloud computing field, will continue to pursue strategic acquisitions to improve its market share and top-line growth.
Moreover, the speedy adoption of engineered systems and cloud suites will drive incremental top-line growth, going ahead. Moreover, Oracle’s strategy of providing end-to-end solutions will further attract new customers in the long run.
Currently, Oracle has a Zacks Rank # 3 (Hold).