Larry Ellison Inc., I mean Oracle Corp. (ORCL-NASDAQ), is paying $495 million to acquire a small niche software player Agile Software (AGIL-NASDAQ). The buyout price is $8.10 per share and that will make most holders that purchased the shares over the last 2 years whole.
Ellison isn’t buying the company at any great valuation or any big discount (even though not a huge price premium either) because the company is only forecast to make $0.08 EPS on revenues of $145 million in fiscal April-2008. Agile brings some pre-packaged tier-1 clients and tier-2, but it has maintenance renewal contracts and lets Oracle more easily compete that much more with SAP, Microsoft (MSFT-NASDAQ), and IBM (IBM-NYSE) on the product lifecycle management software.
When you back out all the liabilities, there is still a net tangible value in the vicinity of $165 million, so net net this is arguably only a $330 million purchase price. This also swings Oracle more into many tier-1 customers: Saturn (auto). Heinz, Dell, Playtex, Hitachi, Qualcomm, Lucent, Siemens, Tyco, and more.
Jon C. Ogg
May 16, 2007
Jon Ogg can be reached at [email protected]; he does not own securities in the companies he covers.
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