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Why Oracle Postponed Its NetSuite Tender Offer

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Sep. 13 2016, Published 3:14 p.m. ET

NetSuite-Oracle buyout tender offer extended

Oracle (ORCL)which is set to announce its fiscal 1Q17 earnings on September 15, 2016, announced the acquisition of NetSuite in late July 2016. On September 9, 2016, Oracle announced that the tender offer in relation to the NetSuite acquisition has been extended until October 6. The deal had been scheduled to finalize by September 15. This extension was a result of the opposition Oracle is facing from investment firm T. Rowe Price Affiliates regarding its acquisition of NetSuite. T. Rowe Price Affiliates is a major shareholder in NetSuite.

In a recent filing, T. Rowe Price said in reference to Oracle’s offer, “At this time none of the Portfolio Managers who own NetSuite stock within our firm intend to follow the board’s recommendation to tender our shares by September 15th.”

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Conditions of Oracle-NetSuite deal

Earlier, Oracle planned to complete the NetSuite acquisition by 2016. Oracle’s offer was a tender offer, which usually has a 45-day timeframe. The Oracle-NetSuite merger is subject to the following conditions:

  • minimum tender condition (the majority of non-affiliated shares)
  • Hart-Scott-Rodino Antitrust Improvements Act of 1976
  • any other regulatory requirements

After Oracle’s Larry Ellison, T. Rowe Price owns the most stock in NetSuite

The NetSuite acquisition is the largest acquisition Oracle has announced after the PeopleSoft acquisition for $10.3 billion in 2004. The above presentation, which appeared on Business Insider, shows that Larry Ellison and his family own approximately 40% of NetSuite stock. After Larry Ellison, the second and third top stockholders are T. Rowe Price and Capital World Investors, which own approximately 13% and 9% in NetSuite, respectively. The minimum tender condition requires the majority of the unaffiliated shares, or in other words, the majority of the remaining 55%.

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