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Oracle Buyout of NetSuite At Risk

Oracle Corp. (ORCL) has given NetSuite (N) shareholders until Nov. 4 to approve a $9.3 billion buyout of the SaaS company. If NetSuite shareholders balk, Oracle Chairman Larry Ellison appears prepared to walk away from the deal. Potential winners in the showdown include Microsoft Dynamics, Salesforce.com, SAP and FinancialForce, each of which will surely sell hard against NetSuite while the company’s ownership fate remains unclear.

Oracle issued the following statement about the deal today:

“This will be the final extension that Oracle is obligated to make under the merger agreement. In the event that a majority of NetSuite’s unaffiliated shareholders do not tender sufficient shares to reach the minimum tender condition, Oracle will respect the will of NetSuite’s unaffiliated shareholders and terminate its proposed acquisition.”

The showdown largely involves NetSuite’s largest institutional shareholder, T. Rowe Price Group. Oracle’s current offer for NetSuite undervalues the SaaS and ERP company, T. Rowe Price has alleged. Oracle needs 20.4 million shares to be tendered to close the deal. As of Thursday, only 4.6 million shares had been tendered, The Wall Street Journal Reported.

Potential Winners

Generally speaking, NetSuite continues to enjoy strong growth in the midmarket, where customers eagerly embrace the company’s SaaS-based ERP and business management offerings. NetSuite also has a strong following in the PSA (professional services automation) market; IT consulting firms have widely deployed NetSuite’s OpenAir PSA offering.

Within the IT channel, NetSuite has a loyal partner ecosystem. The company was one of the first SaaS-based software providers to build an ecosystem of IT consulting firms, integrators and solutions providers.

Still, uncertainty about NetSuite’s ownership fait could open the door for rivals in the market. Microsoft, Salesforce and SAP each compete with NetSuite’s cloud offerings on multiple fronts. And FinancialForce — a fast-growing PSA provider — typically competes against OpenAir.

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