By William Trent, CFA of Stock Market Beat
We generally think Oracle’s (ORCL) acquisition strategy is the right thing for the company and for the industry. Software companies are generally under-leveraged, and even paying for the acquisition in cash would leave the company with very little net debt and combined annual cash flows of nearly $4 billion to offset the current debt of $5.7 billion. So we say they were overdue for another big buyout.
Right on schedule, according to the New York Times, Oracle to buy Hyperion for $3B:
Oracle Corp., the world’s top database software maker, is near an agreement to buy Hyperion Solutions Corp., which makes software that lets companies analyze and track their performance, for about $3 billion, The New York Times said on Wednesday in its online edition.
If the rumors are correct, the buyout price would be around $50 per Hyperion (HYSL) share, about a 25% premium to the closing price. Given that its shares were already up 30% since issuing a strong outlook in January, its shareholders ought to be pretty happy right now.
The author may hold a position in the securities discussed. The author’s current holdings are as follows: Long: Union Pacific (UNP) put options; Air Products (APD) put options; Bookham (BKHM; Ballard Power (BLDP); Syntax Brillian (BRLC); CMGI (CMGI); Genentech (DNA); Ion Media Networks (ION); Three Five Systems (TFS); IShares Japan (EWJ); StreetTracks Gold (GLD); Starbucks (SBUX); U.S. Oil Fund (USO); Plantronics (PLT) call options; Short: Landstar (LSTR) put options; Plantronics (PLT) put options;
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