Oracle announced last week that it will acquire Micros Systems which builds technology for the hospitality and retail industries for $5.3 billion. Last week FORBES reported that many analysts saw the deal as a boon for both companies. This is the biggest acquisition Oracle has made since it closed Sun Microsystems for $7.4 billion in 2010 (which actually cost Oracle $5.6 billion after factoring in Sun's cash. With this deal, it actually cost $4.6 billion net of Micros’ cash according to Oracle)
In a note on the deal Summit Research Partners analysts Richard Williams and Srini Sundararajan wrote, “We think a deal could make sense from a number of perspectives. One aspect would be vertical expertise in parts of retail that are spending increasing amounts on IT infrastructure. Another would be to provide tighter integration between Oracle’s solutions and the software stack for hotel retailers.”
Oracle says the addition of Micros will extend the firm's offerings in hospitality and retail, and will allow the database giant to secure a stronger foothold in industries where there is room for technological expansion. In a research note, FBR Capital Markets said Oracle needs to "go on the deal warpath" in these types of industries to capitalize on an emerging demand for technology and in order to improve its profit margins.
Analysts have also noted that joining Oracle would help Micros further expand internationally. In a statement on the deal Micros CEO Peter Altabef said, ”In combination with Oracle, we expect to accelerate our customers’ ability to innovate and differentiate their businesses by utilizing Oracle’s technologies, cloud solutions and scale.”
Mostly, this acquisition is about buying revenue growth. The hospitality industry is in the midst of a tech revolution, moving from PC-based systems to tablets and cloud software.
"Oracle has successfully helped customers across multiple industries, harness the power of cloud, mobile, social, big data and the internet of things to transform their businesses," said Oracle President Mark Hurd in a statement. "We anticipate delivering compelling advantages to companies within the hospitality and retail industries with the acquisition of MICROS."
The deal is expected to take effect in the second half of 2014.