Oracle Corporation (NYSE:ORCL) is nearing a $5 billion deal to buy Micros Systems Inc. (NASDAQ:MCRS), a Columbia, Md.-based computer hardware and software company, according to the Wall Street Journal.
The acquisition, which would value Micros Systems at more than $67 a share and is considered as Oracle’s attempt to gain a stronger foothold in the retail and hospitality industries, is expected to be announced on Monday morning, the Journal reported, citing a person with knowledge of the deal. Micros produces and sells computer hardware and software that are used in restaurants, hotels and specialty retail markets, while Oracle is known for its database management systems and other cloud-based products.
“Oracle was clearly late to the cloud,” Daniel Ives, an analyst at FBR Capital Markets & Co. (NASDAQ:FBRC), told Bloomberg. “They are starting to make changes, but this would be another step in terms of recognizing what they need to do.”
Oracle, which is the second-largest software maker by revenue after Microsoft Corporation (NASDAQ:MSFT), has $39 billion in cash and marketable securities and a $190 billion market capitalization, the Journal reported. The company needs to explore “the deal warpath” to expand into business segments that do not contribute much to its revenues, the report added, citing recent research from FBR Capital Markets.
The Journal’s report follows a Bloomberg report last week, which said that Oracle and Micros were in talks for a potential merger that could help Larry Ellison’s company regain momentum after 10 quarters of sluggish growth.
According to Bloomberg, Oracle has acquired nearly 100 companies over the past decade, spending as much as $50 billion, while the Journal reported that Oracle’s latest buyout of Micros would be the company’s biggest after its acquisition of Sun Microsystems for $7.4 billion in 2010.
Micros Systems, which generated $1.29 billion in revenues in fiscal 2013, is estimated to generate $1.37 billion next fiscal, Bloomberg reported. Oracle's stock was trading flat in pre-market trading on Monday, after ending nearly 4 percent down on Friday when Micros' stock ended up 0.8 percent.