Oracle Buys Cloud-Based Software Player Taleo (TLEO, ORCL)

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Taleo Corporation (NASDAQ: TLEO) is surging this morning after earnings because it is being acquired.  The stock is the most active pre-market stock on the NASDAQ so far.  Shares are up 17% at $45.55 on the news against a close of $38.94.  The buyer is Oracle Corporation (NASDAQ: ORCL) at $46.00 per share, and the move is for more cloud-based software.  Oracle should not get hit too hard because this is a $1.9 billion deal.  The interesting financial aspect of this merger is that Taleo has been expensive at about 38-times earnings before this premium.  Earnings on an organic basis were only expected to grow about 10%  to $1.13 in 2012 (from $1.03 expected in 2011).  Thomson Reuters was expecting Taleo sales to reach $379.24 million in 2012.  Not a cheap deal, but for a company the size of Oracle it is probably not much of a hit.  Actually, Oracle is trading up marginally when some other acquisition companies might have traded lower.

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