The Oracle logo is displayed on the exterior of the Oracle headquarters.
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An agreement could be finalized soon, some of the people familiar with the matter told The Wall Street Journal. If the deal gets completed it would be Oracle’s biggest-ever acquisition, the Journal noted, and rank as one of the largest takeovers of the year.
Cerner (ticker: CERN) shares jumped 12.8% in trading Friday to $89.69. The company has a market capitalization of more than $23 billion. Oracle (ORCL) declined 4.5% to $98.62. Its market cap is nearly $280 billion.
Barron’s contacted both Cerner and Oracle for comments on the report but has yet to receive a reply.
For Oracle, an acquisition of Cerner would help in its transition into a cloud-based software provider. The stock set an all-time high last week after Oracle posted impressive fiscal second-quarter earnings.
During the quarter, revenue rose 6% and Oracle saw strong growth in cloud-based applications, with 35% growth in Fusion ERP, the company’s financial software for large businesses, and 29% growth in NetSuite ERP, which serves smaller companies. Oracle Cloud Infrastructure consumption growth rose 86%.
Oracle’s cloud business overall was up 22%, and CEO Safra Catz said the company expects growth to accelerate to the mid-20% range in that part of the business by the end of the year.
Analysts at Evercore said an Oracle acquisition of Cerner would “play into the broader discussion/trend around industry clouds’.”
“The challenge is Cerner is still only 20%-25% cloud at the current time and it is a fairly heavy services business. That said, we expect that Oracle could materially accelerate Cerner’s move to the cloud and would likely take down costs at the same time so we think the current structure of Cerner is likely less of an issue than price,” the analysts added.
Brad Haller, a partner in the M&A practice of consulting firm West Monroe Partners, said the acquisition makes sense with Oracle’s valuation at an all-time high.
“Oracle continues to try to find ways to make up ground after being a later adopter of cloud storage,” Haller said.
Write to Joe Woelfel at [email protected]