Oracle Raises Debt to Finance MICROS Acquisition
Oracle Corp. (ORCL) recently announced its decision to sell notes worth $10.0 billion. The proceeds will be used for general corporate purposes, such as refinancing of debt and acquisitions including the company's pending purchase of MICROS Systems Inc. (MCRS), stock repurchases and dividend payments.
Per Bloomberg, the issue included $2.0 billion each of 3.4%, 10-year, fixed-rate bonds and 2.3% securities due 2019. Moreover, the company also sold $1.0 billion of three-year and $750.0 million of five-year floating-rate notes.
Additionally, the debt offering also comprised $1.0 billion of 4.5%, 30-year bonds, $1.5 billion of 2.8%, 7-year notes and $1.75 billion of 4.3%, 20-year debentures. The offering ranks just behind Apple’s (AAPL) $12.0 billion sale in Apr, 2014.
In Jun 2014, Oracle had agreed to acquire MICROS for a sum of $5.3 billion. This transaction is expected to be closed in the second half of 2014. Per Bloomberg, the software maker has plans to acquire five companies including MICROS this year.
MD-based MICROS manufactures and sells point-of-sale hardware, software, and services to restaurant, hotel, hospitality, specialty retail markets and other similar markets.
Currently, MICROS assists in the operation of more than 330,000 sites in 180 countries.Oracle expects this acquisition to be accretive to its bottom line with immediate effect as well as enable it to counter competition from the likes of Demandware Inc. (DWRE) and Netsuite Inc.
This issue happens to be the first of its kind for Oracle in almost a year. In Jul 2013, it had issued $3.0 billion of securities in three parts.
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.
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 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).
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