Oracle, the world’s third largest software maker and top producer of high end business computers, will pay $1.7 billion to acquire Acme packet, a company that sells telecommunications VoIP hardware.
“The addition of Acme Packet to Oracle’s leading communications portfolio will enable service providers and enterprises to deliver innovative solutions that will change the way we interact, conduct commerce, deliver healthcare, secure our homes, and much more,” said Oracle President Mark Hurd.
Oracle is paying $29.25 per share, a 22 percent premium over Acme’s closing price last Friday. The purchase puts Oracle in the video conferencing and IP business and in direct competition with Cisco communications. Oracle’s offer is more than six times Acme’s sales over the last six months, according to Bloomberg data. The sale is expected to revive slumping sales of its $7.4 billion acquisition of Sun Microsystems.
“Either the total addressable market is on the verge of a huge, transformational inflection point and will quickly balloon into a multi-billion dollar market, or Oracle senses that the future of its business model is in the control of communications data flow, and this acquisition, pricey as it is, is a sure beachhead into a new leg of growth,” Greg Mesniaeff, an analyst at Maxim Group, told Bloomberg.
Acme will help speed the development of cloud computing by providing secure communications across all devices and networks.
“The communications industry is undergoing a dramatic shift as users become more connected and dependent on mobile applications and devices,” Bhaskar Gorti, senior vice president and general manager of Oracle Communications, said in the statement. “Service providers and enterprises need a comprehensive communications solution that will enable them to more effectively engage with their customers.”
Last week, Acme reported a $2 million loss on a 15 percent drop in revenue to $70.7 million, topping analysts expectations despite the wane in figures. Acme’s stock has dropped 29 percent over the past year, but managed to improve 37 percent over the last three months due to better than expected sales, the Wall St. Journal reported.
“Together with Oracle, we expect to provide customers with purpose-built, innovative solutions to accelerate the deployment of all-IP networks and help deliver a consistent experience across all services, devices and networks,” said Andy Ory, Chief Executive Officer, Acme Packet.
This is Oracle’s first acquisition for the year. Last year, it acquired 11 companies, the largest of which was a $1.9 billion for Taleo, a human resources cloud software provider. It also purchased customer support software maker RightNow Technologies Inc.
The deal is expected to close in the first half of the year.