Oracle has agreed to purchase Aconex, an Australian company which makes cloud software for construction projects, for $1.19 billion as it seeks to accelerate its push deeper into internet-based products.
The deal valued Aconex at A$7.80 per share, nearly a 50% premium to its closing price on Friday. Aconex shares rallied by 44% to A$7.63 in early-morning Monday trading in Sydney.
Oracle has strived to pivot to cloud-based software, but has struggled, with the company missing earnings estimates for cloud-computing sales in the last quarter. Last week Oracle also provided weaker than expected forecast for growth in its cloud computing business, with its shares falling to a three-month low.
Acquisitions Fuel Cloud-Computing Growth
Oracle has used acquisitions to expand further into the cloud, including its purchase of NetSuite for $9 billion last year.
The Aconex deal is Oracle’s second buyout of a cloud-based construction software maker, after it snapped up contract and payment management platform Textury for $663 million in 2016. Oracle merged Textura with its own construction management software, Primavera, to create a “Construction and Engineering Global Business Unit”.
Aconex was founded in 2000 and has offices in 30 countries worldwide, along with 70,000 customers, mostly building construction managers, who use the software to manage over $1 trillion in construction projects — 16,000 in total across 70 countries. It is one of the few Australian-based companies to have a truly global footprint, although its share price fell sharply earlier in 2017 and the company became the country’s most-shorted stock.
Synergies Behind The Deal
Analysts say Aconex will compliment Oracle’s own cloud-based construction software, creating an end-to-end solution for clients which can cover planning, management and payments. The deal will give Oracle faster growth in new markets and reach to new global customers, while Aconex will gain access to Oracle’s considerable sales and research and development resources.
Aconex co-founder and chief executive Leigh Jasper said in a recent letter to customers: “We expect that Oracle’s continued investment in Aconex will deliver more functionality and capabilities at a quicker pace, as well as provide better integration and alignment with Oracle’s other product offerings.”
Once the deal closes, probably in the first half of 2018, Aconex will be absorbed by Oracle’s construction and engineering unit. Oracle is unlikely to face any competition for Aconex as there are few players who can compete with its size or revenue. Aconex’s board unanimously recommended the deal.
Oracle has acquired a bevy of other companies this year, including API design platform Apiary, a startup which provides tools for developers, Wercker, and Moat, which measures advertising engagement.
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