Oracle (ORCL) – Get Oracle Corporation Report said Monday it will pay $28.3 billion for electronic medical records company Cerner (CERN) – Get Cerner Corporation Report, likely capping the best year for global merger deals in market history.
Oracle will pay $95 a share, in cash, for the Kansas City, Missouri-based group, a 35% premium to the stock’s share price when reports of the deal began to surface earlier this month. Oracle said the addition will be ‘immediately’ accretive to earnings, with a ‘substantial’ contribution expected in the second fiscal year after the deal closes.
The takeover of Cerner, the second-largest designer of software used by doctors and hospitals to mange and store medical records, will mark the biggest in Oracle’s corporate history at just under 3 times the size of its $10 billion purchase of PeopleSoft in 2005.
“Working together, Cerner and Oracle have the capacity to transform healthcare delivery by providing medical professionals with better information—enabling them to make better treatment decisions resulting in better patient outcomes,” said Oracle chairman Larry Ellison. “With this acquisition, Oracle’s corporate mission expands to assume the responsibility to provide our overworked medical professionals with a new generation of easier-to-use digital tools that enable access to information via a hands-free voice interface to secure cloud applications.”
“This new generation of medical information systems promises to lower the administrative workload burdening our medical professionals, improve patient privacy and outcomes, and lower overall healthcare costs,” he added.
Oracle shares were marked 3.7% lower in mid-day Monday trading to change hands at $93.06 each. Cerner, which closed at $89.77 each on Friday, having surged 13% on the session, was marked 0.9% higher at $90.60 each.
Global merger deals topped $5 trillion for the first time on record this year, an all-time high powered in part by SPAC deals, cheap capital and major corporate restructurings.
Dealogic, which compiles merger and acquisition data, said the value of global deals rose 63% from last year to $5.63 trillion, a fresh all-time high that eclipsed the 2007 record of $4.42 trillion.
Plans unveiled by General Electric (GE) – Get General Electric Company Report, 3M (MMM) – Get 3M Company Report and Johnson & Johnson (JNJ) – Get Johnson & Johnson Report to split-up their companies played a big role in this year’s record total, as did the surge in deals made with so-called special purpose acquisition companies, or SPACs, lead by Singapore-based Grab’s $4.5 billion merger earlier this month.
Oracle shares traded at an all-time high last week, giving the cloud and software group a market value of around $290 billion, following better-than-expected second quarter earnings and a robust near-term outlook.
Oracle, which earns the bulk of its revenues from its cloud services and license support unit, beat Street earnings forecasts by a dime with an adjusted second quarter bottom line of $1.12 per share.
Cloud division revenues topped $7.5 billion as companies continue to spend on hybrid work solutions in a post-pandemic world, while overall revenues grew by 6% to $10.4 billon.
Bookings grew at an even faster pace, rising 11% from last year’s levels, giving Oracle the confidence to forecast current quarter revenues in the region of $10.7 billion to $10.9 billion, based on growth forecasts, with profits of between $1.19 and $1.23 per share.