Analysts Battle Over Competing Bids For MICROS
Analysts battle over the possibility of competing bids for MICROS Systems (NASDAQ: MCRS).
Oracle Deal “Makes Sense”
On Wednesday, Summit Research analyst Richard Williams commented on the possible acquisition of Micros by Oracle (NYSE: ORCL) for roughly $5 billion. Williams remarked that the deal is probable, especially following the 2014 National Retail Federation Conference in New York. At the conference, the analyst noted that retailers are continuing to invest in infrastructure software to better compete with online retailers.
Daniel Ives from FBR also believes that this deal “makes sense”. Ives wrote, “Strategically speaking, we believe this deal makes sense for Oracle as it would (1) complement the company's existing ATG e-commerce platform, a leading e-commerce solution for large vendors, (2) round out Oracle's broader cloud-based customer relationship management solution set by adding e-commerce, (3) give the company a potential solution to stave off the emerging threat from SaaS e-commerce vendors such as Demandware (DWRE, Not Rated) and NetSuite (N, Outperform) and (4) bolster the company's ability to monetize the growing trend of companies moving to an omnichannel software platform.”
Is the $5 Billion Price Tag Too Modest?
Nomura analyst Rick Sherlund commented, “Given the low interest earned on Oracle's excess cash, we note that the acquisition for cash would be modestly additive to ORCL's FY 2015 EPS in the hypothetical scenario where the acquisition were to be completed for the entire year. In the less likely scenario that stock were used, the $5bn to $6bn potential price would be potentially modestly dilutive.”
Oracle as "Sole” Bidder
Bhavan Suri from William Blair downgraded shares of Micros from Outperform to Market Perform. In the note, the analyst remarked that it is unlikely for SAP and IBM to make a bid for Micros. Suri reported that Micros doesn't fit the mold of the “Saas solution” many tech companies are willing to buy.
Since Micros is an “on-premise legacy” software company, William Blair doesn't see an additional upside for shares.
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