NetSuite Shares Volatility Possibility With Oracle Deal Deadline

November 5
5:30 AM 2016

Shares of cloud storage company NetSuite dipped 1% to $92.80 on Friday, after surging the day before, maintaining a wide discount from Oracle's takeover offer price that expires on Friday.

 Oracle offered to buy Netsuite for $9.3 billion earlier this year, a move that would combine Netsuite's software with Oracle's growing cloud business. But the offer expires on Thursday night, according to Barron's, which reports the deal has about a 63 percent chance of going through.

The stock pared its gains, but still ended the day 5 percent higher at $94.

Oracle, the software giant run by founder Larry Ellison, agreed to buy NetSuite in July for $109 per share, or $9.3 billion, to better compete with nimbler rivals such as  Workday and that specialize in cloud-based offerings. 

During September, NetSuite disclosed that it received a formal letter from T. Rowe Price, the company's second-largest shareholder behind Ellison, opposing the deal price. The letter criticized the process behind the deal and said T. Rowe would not tender its shares.

Oracle was forced to extend its tender offer deadline to Friday. T. Rowe sent a letter last week to Oracle suggesting the company raise its offer to $133 per share. Oracle has said it will not raise its bid. NetSuite shares soared by more than 6% on Thursday, prompting the stock to be temporarily halted. The stock has steadily declined since resuming trading on Thursday afternoon.

According to terms of the Oracle agreement, a majority of NetSuite's 40.8 million unaffiliated shares, or shares not tied to Ellison and other insiders, must be tendered for the deal to be completed.

As of July, T. Rowe owned 12.2 million NetSuite shares, meaning if one of the other large fund managers in the stock, Capital World or Brown Advisory, also refuse to tender their shares, the agreement will struggle to get the majority it needs.

Capital World is NetSuite's third-largest shareholder and Brown Advisory is the fourth largest. People from the press cannot the reach the spokesperson of NetSuite and Oracle for some details regarding its shares and investment.

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