The companies have a shared history dating back to when NetSuite was founded in 1998 as NetLedger. Established as a provider of Web-hosted software for accounting, NetLedger was launched with the support of $125 million from Oracle founder and now-chairman/CTO Larry Ellison.
Described as Oracle's largest acquisition since its $10.3 billion purchase of PeopleSoft in 2005, the addition of NetSuite is expected to immediately boost Oracle's earnings, according to co-CEO Safra Catz. In May, Oracle announced two other cloud services acquisitions, purchasing the construction-focused firm Textura for $663 million and the utilities-focused Opower for $532 million.
"Oracle and NetSuite cloud applications are complementary, and will coexist in the marketplace forever," Mark Hurd, Oracle's other co-CEO said today in a statement. "We intend to invest heavily in both products -- engineering and distribution."
Zach Nelson, NetSuite's CEO, added that the acquisition will enable his company to "benefit from Oracle's global scale and reach to accelerate the availability of our cloud solutions in more industries and more countries."
Expected to close later this year, the transaction could net Ellison $3.5 billion in personal profit, according to the Financial Times. As of today, Forbes lists Ellison as the world's seventh richest person, with an estimated net worth of $51.6 billion. In 2008, Ellison famously described cloud computing as a "fashion-driven" trend, but his company has since embraced the cloud and seeks to boost its capabilities to compete with rivals such as Salesforce.
NetSuite, which today announced second-quarter revenues of $230.8 million, a 30 percent increase over the same quarter last year, provides cloud-based software for enterprise resource planning and other applications to more than 30,000 business customers and organizations around the world.
In an FAQ to customers and partners, Oracle said it is "committed to protecting and enhancing customer investments in NetSuite solutions" and plans to accelerate the pace of innovation in the company's offerings after the transaction closes. Until then, the companies will continue to operate independently.
"Gaining access to Oracle's tremendous resources and deep technology stack makes this combination a winner for NetSuite's customers, employees and partners," according to the FAQ. "We expect NetSuite to utilize Oracle's global scale and reach to accelerate the availability of its cloud solutions in more industries and more countries."
In May, IDC analyst Gerry Murray told us that Oracle's cloud ambitions mean "there is a lot more M&A [mergers and acquisitions] and product evolution work to do."