Oracle may walk away from $9.3B NetSuite purchase

Oracle warned Friday that it might withdraw its proposed $9.3 billion acquisition of NetSuite.

The Redwood City tech giant extended its tender offer — first made in July and extended to October — for the San Mateo-based cloud company to Nov. 4, in what it says is its final offer.

“In the event that a majority of NetSuite’s unaffiliated shareholders do not tender sufficient shares to reach the minimum tender condition, Oracle will respect the will of NetSuite’s unaffiliated shareholders and terminate its proposed acquisition,” Oracle said in a news release Friday.

NetSuite’s second-largest shareholder, T. Rowe Price, last month said it would oppose Oracle’s bid, which it sees as undervaluing NetSuite. The institutional investor also brought up a conflict-of-interest issue, saying that since Oracle Chairman Larry Ellison is the biggest shareholder of NetSuite, other suitors probably would not want to come forward.

T. Rowe Price said in September that it owned about 14.5 million shares, or 18 percent, of NetSuite, while Ellison owns about 40 percent. Oracle said Friday that it needs 20.4 million shares tendered for the deal, which it expected to close by the end of the year, to go through. As of Thursday, it had about 4.6 million shares tendered.

The Oracle-NetSuite ties run deep. Ellison was an early investor in NetSuite, a cloud pioneer and maker of business- management software. Evan Goldberg, founder and chief technology officer of NetSuite, and CEO Zack Nelson are both formerly of Oracle.

A NetSuite purchase, which received U.S. antitrust clearance last month, would rank among Oracle’s biggest. Oracle bought PeopleSoft for more than $10 billion in the 1990s and Sun Microsystems for $7.4 billion in the next decade.

NetSuite shares are down more than 3 percent to $105.82. Oracle is offering $109 a share in cash, a 19 percent premium over the value of NetSuite shares at the time of the offer. Oracle shares are down 0.19 percent to $38.65.

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Photo: Larry Ellison in 2010. (Justin Sullivan/Getty Images) 

 

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