Oracle’s Larry Ellison made billions by overpaying for NetSuite: lawsuit

Under pressure from founder Larry Ellison, Oracle paid too much for NetSuite, and Ellison made more than $4 billion for himself and his family as a result, a new lawsuit claims.

Redwood City’s Oracle in July announced it was buying San Mateo cloud-software firm NetSuite for $9.3 billion. Ellison at the time owned about 39 percent of Netsuite, and together with his family about 45 percent, according to media reports.

In a lawsuit filed this week, the Southern Pennsylvania Transportation Authority, a shareholder in Oracle, alleged that Ellison and his near-and-dear ones hauled in an abundance of treasure from the deal because company chairman Ellison had pushed Oracle’s directors to approve an inflated price, Law360 reported (paywall).

“The big winner was Ellison and his family, who used Oracle’s money to buy NetSuite … and gained personal wealth of over $4.1 billion in the process,” the suit claimed. “Ellison stood on both sides of the transaction.”

Oracle declined to comment on the lawsuit.

Even though “the transaction required Oracle to pay a price far more than any independent, disinterested third-party would,” the suit said, “it is unsurprising that the transaction was approved under the purview of Oracle’s board.”

That’s because the directors knew that if they thwarted Ellison’s will, they’d be “removed from their lucrative positions,” according to the suit.

The suit quoted a biography of Ellison: “Larry’s like a spiritual guru, and Oracle is like a cult.”

NetSuite, the suit claimed, had failed to make a profit during its 18-year existence, and the $109-per-share price Oracle paid was about 60 percent higher than the trading price at the time.

However, when the deal had been nearly done, an analysis by Bloomberg came to a conclusion quite different from that of the plaintiff in this lawsuit.

Although investors were “bound to question a deal in which Ellison is a big shareholder of both the buyer and seller,” Oracle’s price valued NetSuite at around 11 times its revenue, which was “smack-dab in line with other recent software acquisitions,” according to Bloomberg.

“The merger does make strategic sense and the offer is fair.”


Photo: Oracle chairman Larry Ellison in 2010 when he was CEO (Justin Sullivan/Getty Images)


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  • FlKeysFisherman

    He also swindled the taxpayers out of $200 million for Oregon’s Obamacare website that never worked. California’s Attorney General is slow walking the case and no one in the media seems to care. The corruption in this country is out of control.