Analysts Eager To Comment On Oracle's Acquisition Of Micros

Analysts are eager to comment on Oracle's ORCL recently announced acquisition of MICROS Systems MCRS.

Details of the Acquisition

• In a press release on Monday, Oracle announced that "it has entered into a definitive agreement to acquire MICROS Systems, a provider of integrated software and hardware solutions to the Hospitality and Retail industries, for $68.00 per share in cash."
• The acquisition is valued at roughly $5.3 billion, or $4.6 billion net of Micros' cash, according to Oracle.
• The release states, "The addition of MICROS extends Oracle's offerings in industries by combining MICROS' industry specific applications with Oracle's business applications, technologies and cloud portfolio. Together, Oracle and MICROS will help hotels, food & beverage facilities, and retailers to accelerate innovation, transform their businesses, and delight customers with complete, open and integrated solutions."
• The transaction will tentatively close in the second half of 2014.

Analysts Respond

• FBR analyst Daniel Ives reported that the deal marks the beginning of M&A activity for Oracle. Ives noted that Oracle's "soft" fourth quarter results shows the company's need to "catalyze new revenue growth." FBR remarked that the Micros deal is a "step in the right direction" with the acquisition "spurring more software M&A, specifically in e-commerce."
• Analyst Vincent Colicchio from Noble Financial Capital Markets downgraded Micros shares following news of the acquisition and "possibility of another party proposing a higher acquisition price." Although the price is in-line with the multiple paid for software companies, Colicchio noted that it represents a significant discount to the 2011 Radiant Systems acquisition.
• Summit Research Partners Richard Williams efficiently described the issues and solutions regarding the deal in his note.
• The analyst reiterated a Hold rating and $35.00 price target, emphasizing the cost and challenges involved to re-architect the retail suite. Despite this concern, Williams commented that Oracle will gain 330,000 customer sites in 180 countries.
• The analyst noted, "Micros brings to Oracle hotels solutions distribution, revenue management and reservations. It brings property management, sales & catering and point-of-sale, while adding workforce management tools to Oracle's financial and back office solutions. Micros brings online ordering, reservations, kitchen & table management, enterprise operations, fraud management and point-of-sale to food & beverages. Micros also brings customer loyalty, point-of-sale, workforce management and fraud prevention to retail solutions."