Oracle to buy Cerner for $28.3 billion in bold move on health - Hindustan Times
close_game
close_game

Oracle to buy Cerner for $28.3 billion in bold move on health

Bloomberg |
Dec 20, 2021 08:50 PM IST

The all-cash transaction, Oracle’s biggest-ever deal, will see Oracle pay $95 a share, the companies announced in a statement Monday.

Oracle Corp. agreed to acquire medical-records systems provider Cerner Corp. for about $28.3 billion, a deal that would add a broad customer base in the health-care industry to bolster the software maker’s cloud-computing and database businesses.

Oracle, the second-biggest software maker by revenue, is best known for legacy database products.(Reuters)
Oracle, the second-biggest software maker by revenue, is best known for legacy database products.(Reuters)

The all-cash transaction, Oracle’s biggest-ever deal, will see Oracle pay $95 a share, the companies announced in a statement Monday. The price represents a 20% premium over Cerner’s market value last Thursday, when the deal talks first became public. Oracle shares slid 2% while Cerner shares were halted pending the announcement.

Hindustan Times - your fastest source for breaking news! Read now.

Oracle Chief Executive Officer Safra Catz said the acquisition should be “immediately accretive to Oracle’s earnings” on an adjusted basis in the first full fiscal year after closing and contribute “substantially more to earnings in the second fiscal year and thereafter.” The transaction is expected to close next year, the companies said.

Oracle, the second-biggest software maker by revenue, is best known for legacy database products and in recent years has struggled to gain ground in cloud computing, trailing far behind market leaders such as Amazon.com Inc. and Microsoft Corp. The deal for Cerner gives Oracle a huge foothold in technology for the health-care industry -- the sector is expected to spend $15.8 billion on cloud infrastructure and software by 2023, according to market researcher IDC.

David Feinberg, formerly vice president of Google Health, took over as Cerner’s chief executive officer on Oct. 1, saying a major goal would be to use data as a diagnostic tool to help doctors and nurses improve patient care. Two years ago, Cerner announced a deal with Amazon’s cloud division to develop programs trying to predict medical diagnoses or recommend courses of treatment for patients.

Cerner’s choice of Feinberg as CEO highlighted the company’s move toward “a strategy based on big data, population health management and consumerism -- and away from the legacy health records business,” Donald Hooker, an analyst at KeyBanc Capital Markets, said when Feinberg was named to the post in August.

Cerner, which competes with Epic Systems Corp. and Allscripts Healthcare Solutions, among others, generated $5.51 billion in revenue during 2020, and sales are projected to rise by 5% to $5.8 billion this year. The company is based in North Kansas City, Missouri, has about 23,000 employees. 

The acquisition is Oracle’s biggest since its 2016 purchase of NetSuite Inc., a deal valued at $8.7 billion. That purchase has provided Oracle with a financial software targeted to small-and-mid-sized businesses, which has become among Oracle’s fastest growing products.

Unlock a world of Benefits with HT! From insightful newsletters to real-time news alerts and a personalized news feed – it's all here, just a click away!- Login Now!
Stay informed on Business News along with Gold Rates Today, India News and other related updates on Hindustan Times Website and APPs
SHARE THIS ARTICLE ON
Share this article
SHARE
Story Saved
Live Score
OPEN APP
Saved Articles
Following
My Reads
Sign out
New Delhi 0C
Thursday, March 28, 2024
Start 14 Days Free Trial Subscribe Now
Follow Us On