Oracle Corp. agreed to buy Aconex Ltd., an Australian company that makes cloud-based collaboration software for construction projects, for A$1.56 billion ($1.19 billion) cash as it pushes deeper in to new markets to gain more customers.
The deal values Aconex at A$7.80 per share, 47 percent more than Friday’s closing price. Aconex shares surged 44 percent to A$7.63 at 11:09 a.m. in Sydney trading Monday.
Oracle has been looking to refashion its business around internet-based products. The strategy was dealt a setback last quarter when cloud-computing sales missed analysts’ estimates. The Redwood City, California-based company also gave a disappointing forecast for cloud growth in last week’s earnings report, which sent shares falling the most in three months. Oracle has been turning to acquisitions to accelerate its shift to the cloud, including last year’s $9 billion purchase of NetSuite Inc.
Aconex’s board unanimously recommended the deal, the Melbourne-based company said in a statement. The company’s directors, who represent about 13.6 percent of the stock, will vote in favor of the bid in the absence of a superior proposal.
The Australian company’s software is used by infrastructure and building construction managers to track the status and potential costs of their projects. It’s also one of the few Australian technology businesses to have a global footprint. Only eight listed technology companies based in Australia are worth more than A$1 billion compared with 21 mining companies, according to data compiled by Bloomberg.
Aconex became Australia’s most-shorted stock after its share price fell dramatically earlier this year. The run was sparked by a revenue forecast downgrade it blamed on market uncertainty caused by the Brexit vote and Donald Trump’s election as U.S. President.
Baillieu Holst Ltd. analyst Luke Macnab said Oracle and Aconex businesses should be a good fit thanks to the Australian company’s strong niche offering and Oracle’s global footprint. Aconex’s expansion into Europe has done worse than initially expected, and the deal would likely give it access to Oracle’s sales and R&D resources.
“Aconex were looking to grow globally over the next five to ten years or so,” Macnab said. “This enables them to get global scale pretty much instantly.”
RBC Capital Markets analyst Paul Mason said Oracle was unlikely to face rival bids from domestic players because no local competitor could match its size or revenue.
“Oracle looks like its reasonably unlikely to face significant competition now that its made its first move,” he said. “They’d need to have some pretty significant private equity backing, or something, to be able to make a competitive bid.”
Aconex listed on the Australian Securities Exchange in December 2014, selling shares at A$1.90 apiece. It has more than 70,000 customers and its cloud-based software has been used on 16,000 projects across construction, infrastructure and energy in 70 countries, according to its website.