Oracle Corp said it would buy Micros Systems in a $5.3 billion deal as the world's No.2 business software maker looks to boost flagging growth through acquisitions.
The purchase of Micros, which makes point-of-sale hardware and software for restaurants and hotels, is the first multi-billion dollar acquisition by Larry Ellison-led Oracle in five years and follows disappointing fourth-quarter results.
Analysts said the acquisition could be first in a string of deals for Oracle, which has been stung by aggressive pricing by companies such as Salesforce.com Inc and Workday Inc for their software and internet-based products.
"I think this is really Larry Ellison looking in the mirror realizing the need to get aggressive yet again on M&A," FBR Capital Markets analyst Daniel Ives told Reuters.
"It is clear to us that the company needs to quickly put more 'growth fuel in its engine' to catalyze growth in the top-line," Ives said.
The Micros deal fits with Oracle's plan to expand its fast-growing cloud business, where it has been a late entrant.
Micros sells internet-connected cash registers and provides a host of cloud-based services such as e-commerce and customer relationship management to hotels and restaurant chains, including Louvre Hotels, TGI Friday's and Yum Brands Inc.
Micros' full-year revenue rose 15 percent to $1.27 billion in the year ended June 2013.
ORACLE'S WAR CHEST
Oracle's spree of acquisitions has slowed of late. Micros is the company's largest acquisition since its $5.6 billion purchase of Sun Microsystems in 2009.
"I believe it's just the beginning of a massive M&A cycle for Oracle where we could see them spending $15-$20 billion in acquisitions over the next one to two years," Ives said.
He reckons the deals will be focused on cloud, big data as well as cyber security.
The company had $38.8 billion of cash and short-term investments as of May 31, positioning it for more deals.
Oracle said on Monday it offered Micros shareholders $68 per share, representing a premium of 3.4 percent to the stock's Friday close.
Micros shares were trading at $67.97 on Monday afternoon. Up to Friday's close, they had risen 14 percent since Bloomberg reported on June 17 that the companies were in talks.
Ives said the Micros deal could help Oracle stave off threat from e-commerce software providers such as Demandware Inc and NetSuite Inc.
Oracle said the transaction is expected to add to earnings immediately.
Wedbush analyst Steve Koeing estimated the deal would add about 3-4 percent to Oracle's revenue and add 3 cents to 4 cents per share to its earnings on a twelve-month basis.
Oracle's shares were up 0.7 percent at $41.09.
(Reporting by Abhirup Roy and Lehar Maan in Bangalore; Additional reporting by Supriya Kurane; Editing by Sunil Nair and Saumyadeb Chakrabarty)