Oracle Corp. agreed to buy Eloqua Inc. for about $871 million, further expanding in cloud computing and ratcheting up competition with Salesforce.com Inc. and SAP AG.
The $23.50-per-share offer is more than twice Eloqua’s initial public offering price in August, and 31 percent higher than its closing price yesterday. The board of Eloqua, whose Web-based tools are used in marketing and revenue-performance management, approved the deal, according to a statement.
Oracle Chief Executive Officer Larry Ellison is spending to add cloud software that customers can rent and run over the Internet. The deal may spark more acquisitions of online marketing companies by Salesforce, SAP, Adobe Systems Inc. and International Business Machines Corp., according to Peter Goldmacher, an analyst at Cowen & Co.
“Oracle paid up,” Peter Goldmacher, an analyst at Cowen & Co. in San Francisco, said in an interview. “They see a real opportunity in marketing automation.”
Salesforce, the largest maker of customer management software, has been expanding in Web marketing and has an online sales partnership with Eloqua.
Web-based software lets companies save money by renting software online rather than installing and updating it themselves. In its fiscal second-quarter earnings report Dec. 18, Oracle said cloud-computing software is on track for $1 billion in annual revenue and poised to become much larger.
Oracle’s $871 million offer, which is net of Eloqua’s cash, is more than nine times the target company’s sales over the last 12 months, according to data compiled by Bloomberg. By comparison, German business software maker SAP paid 12 times sales for human resources software developer SuccessFactors Inc.
In two previous large cloud-computing deals this year, Redwood City, California-based Oracle paid 6.3 times trailing 12 months’ sales for HR tools maker Taleo Corp. in April, and 7.1 times the revenue of customer support software maker RightNow Technologies Inc., which it acquired in January.
Eloqua’s valuation is comparable to recent cloud-computing deals, and Oracle has been paying a slight premium for cloud acquisitions, Walter Pritchard, an analyst at Citigroup Inc., wrote in a research note today. The company historically has paid five to nine times recurring revenue for companies it’s acquired, and eight to 10 times recurring revenue for online software companies, said Pritchard, who has a buy rating on the shares.
Eloqua, based in Vienna, Virginia, makes products that help companies tailor and measure the effectiveness of e-mail marketing campaigns, ranging in price from $2,000 a month for four to 10 users, to $6,400 a month for 250 users. It went public Aug. 1, and its shares had gained 56 percent through yesterday.
The transaction is expected to close in the first half.
Shares of Oracle were little changed at $33.94 at the close in New York. Eloqua jumped 32 percent to $23.66.