Oracle makes $1.9B offer for Taleo to add more cloud services

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There is more M&A activity in the cloud space today as Oracle offered the Internet-based human-resources software company Taleo $1.9 billion for its business. The acquisition will help Oracle better position itself in the booming cloud services market.

Just last month, Oracle acquired RightNow for $1.5 billion.

Ovum's chief analyst, Tim Jennings, said in an email that this deal shows enterprises increasingly are likely to accept the Software-as-a-Solution model, and he said he believes the Human Capital Management (HCM) space will follow "in the footsteps of Customer Relationship Management (CRM) as the next SaaS battleground.

"Oracle's announcement of intent to acquire Taleo is the latest in an aggressive and competitive wave of market consolidation in the cloud-based Human Capital Management space, which has seen SAP acquire Success Factors and Salesforce.com acquire Rypple," said Jennings. "It also emphasizes the urgency that the major enterprise application vendors attach to establishing a strong position in cloud-based software."

Both Oracle and SAP, he said, have existing on-premise HCM solutions, but both have been prepared to pay large sums for cloud-based equivalents, rather than simply transitioning their existing solutions to the cloud.

"Taleo will further advance Oracle's public cloud strategy, joining the recently closed acquisition of RightNow for customer service management, Oracle's Social Network for collaboration and Oracle's own Fusion applications," Jennings said

Oracle's offer of $46 a share is an 18 percent premium to Taleo's Wednesday closing price of $38.94, but Taleo shares were up close to 17 percent by mid-morning at $45.54.

For more:
- see this Reuters article

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