Oracle Corporation (NYSE: ORCL), one of the US’s leading tech companies – labeled the second-largest software company in the world in 2020 – today announced its acquisition of Cerner Corporation (NASDAQ: CERN)- a key provider of digital information systems usually used in healthcare. There was little reaction in the market, with Oracle shares dipping around 3% as Cerner shares gained just under 1%.
The agreement will take place as an all-cash offer of $95 per share, totaling an aggregate of $28.3B in equity value. The acquisition comes as the latest addition for Oracle, whose aggressive acquisition strategy has resulted in incredible growth metrics over the last couple of years. The deal will mark Oracle’s debut into the healthcare vertical – a constantly growing and shifting market that also has the potential to reap benefits for Oracle’s young cloud business.
Safra Catz, CEO of Oracle, makes particular reference to the growth incentives:
“Cerner will be a huge additional revenue growth engine for years to come as we expand its business into many more countries throughout the world. That’s exactly the growth strategy we adopted when we bought NetSuite—except the Cerner revenue opportunity is even larger”
Oracle might be a feasible option for a relatively low-risk software investment. With a concurrent growth framework, aggressive strategy, and multiple market entrances, Oracle is on the right track for continuing 2020’s level of growth. ORCL stock is down 3.3%, trading at a price of $93.36.
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Oliver is a financial writer and analyst specialising in the US stock market, with years of personal experience in understanding micro/macroeconomic structures, market trends and fundamental analysis.