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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