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Oracle paid US$9.3 billion in cash to buy Netsuite a cloud ERP company. The move will help bring the database giant up-to-speed in the market for cloud business apps.

It needed a boost. Oracle has dismissed cloud computing in the past and has been slow at getting onboard.

While Amazon and Microsoft were busy building cloud portfolios, Oracle still pushed on-premise computing.

As reported in The New York Times, the deal beefs up the database giant's cloud offering.

Oracle will pay $109 per NetSuite share in cash, according to a news release issued by Oracle on Thursday. That represents a 19 percent premium above NetSuite’s closing price on Wednesday.

The deal surprises no-one. Netsuite has always been close to Oracle. Perhaps too close. An ex-Oracle executive founded Netsuite, its current CEO also worked for Oracle. Oracle boss Larry Ellison provided capital in Netsuite's early days. He remained a significant shareholder with about 40 percent of the company's stock.

Some will raise eyebrows at the price Oracle paid. Many in the tech sector think Netsuite stock was overvalued.

It won't help conspiracy theorists that Ellison pockets US$3.5 billion from the deal.

Yet as Ben Kepes writes in Computerworld:

Oracle was quick to inform the world that the deal was decided upon by a subcommittee consisting of only independent directors of the company.

The news may not be good for customers. Oracle has a history of putting the price squeeze on customers after an acquisition. Not only that, but it has a rigid, old-school approach to licenses, renewals and support. Netsuite has always belonged to the more approachable SaaS world.

Nor is it good news for Netsuite employees. Oracle has a reputation for brutal efficiency when culling staff after a take-over.

Still, Oracle does acquisitions better than most technology companies of its scale. You can expect the new owner to sniff out the value propositions, repackage them and get them to market fast. The deal will also speed Oracle's own cloud transformation.

This story was first posted at billbennett.co.nz

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