Oracle Set to Buy MICROS for $5.3B - Analyst Blog

Confirming earlier rumors, Oracle Corp. ORCL recently agreed to buy MICROS Systems MCRS for a whopping sum of $5.3 billion. The transaction is expected to close in the second half of 2014.

Shares of Micros surged 3.36% ($2.21) following the news. Oracle shares recorded a slight increase of 0.69% ($0.28), which in turn reflects that the acquisition has already been priced in.

MD-based MICROS manufactures and sells point-of-sale hardware, software, and services to restaurant, hotel, hospitality, specialty retail markets and other similar markets.

MICROS generated revenues of $1.29 billion in fiscal 2013 and is projected to generate revenues of $1.37 billion in fiscal 2014. Currently, MICROS assists in the operation of more than 330,000 sites in 180 countries.

Oracle believes that the addition of MICROS to its portfolio will extend its offerings in the retail and hospitality industries as well as strengthen its position in all those industry spaces where there is scope for technological expansion. Moreover, the company also expects this acquisition to be accretive to its bottom line with immediate effect.

It will also enable Oracle to face competition from the likes of Demandware Inc. DWRE and Netsuite Inc. N as well as enable it to solidify its position as a software-as-a-service e-commerce vendor.

This is the biggest deal for Oracle since it acquired Sun Microsystems for $7.0 billion in 2010. Per reports, Oracle intended to acquire MICROS six years back but the deal did not materialize that time due to some unknown reasons.

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).