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Tech behemoth Oracle Corp. (NYSE: ORCL) announced today (Monday) that it's buying MICROS Systems Inc. (Nasdaq: MCRS) for $5.3 billion, a move aimed at expanding its software offerings in the hospitality and retail segments.
After ORCL stock slumped 6.5% in after-hours trading last Thursday on the heels of a big Q4 earnings miss, the acquisition might be just the thing to nudge ORCL shares higher.
Oracle will pay $68 for each share of MCRS, a 3.4% premium to MICROS's Friday close. The deal is expected to close in the second half of 2014.
This isn't the first time ORCL has courted MCRS. The first attempt came six years ago. But amid last-minute negotiations, the deal fell through.
But now MCRS is bigger – and a better buy.
Why Oracle Is Buying MICROS Systems Inc. (Nasdaq: MCRS)
Columbia, Md.-based MICROS, founded in 1977, now has more than 6,300 employees. It sells Internet-connected cash registers and also specializes in providing technology for the hospitality and retail industries through point-of-sale, e-commerce, and management software.
Its systems are installed in table and quick-service restaurants, motels, hotels, casinos, and other locations dotted across 180 countries.
It's that vast reach and specialization that Oracle deems lucrative.
"Oracle has successfully helped customers across multiple industries harness the power of cloud, mobile, social, Big Data, and the Internet of things to transform their businesses," Oracle President Mark Hurd said in a statement. "We anticipate delivering compelling advantages to companies within the hospitality and retail industries with the acquisition on MICROS."
In fiscal 2013, MICROS booked revenue of $1.29 billion. Over the last three years, growth has been impressive, in the low double-digit range. The company forecasts revenue of $1.37 billion in fiscal 2014, which ends this month, according to Bloomberg.
According to Peter Altabef, MICROS' president and chief executive officer (also a former Dell executive), the deal will help customers "to innovate and differentiate their businesses by utilizing Oracle's technologies, cloud solutions, and scale."
Oracle, late to cloud computing, has some catching up to do.
Last week, following Oracle's fiscal fourth-quarter earnings that missed analysts' estimates,
FBR Capital analyst Daniel Ives said in a research note that company executives "have some work ahead of themselves to morph Oracle into its next phase of growth around attacking the cloud."
And that growth will likely come from acquisitions…