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The board at Eloqua (NASDAQ:ELOQ) has unanimously approved the acquisition for about $810 million, or $23.50 per share, a 31 percent premium on its last closing price. The acquisition is planned to take place sometime next year. As Oracle continues building its online cloud systems, Eloqua’s software and client database could make a valuable asset to the relatively new technology field.
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CHEAT SHEET Analysis: Will this acquisition move up Oracle’s stocks?
One of the core components of our CHEAT SHEET Investing Framework focuses on catalysts that will move a company’s stock.
With the fiscal cliff near, it may be a risky time for Oracle to make expensive purchases like that of Eloqua, considering tax changes may force clients to buckle down and cut back on their business with Oracle. If the acquisition looks bad to investors, shares could also drop. As with any investment, Oracle has to rely on Eloqua to provide good returns, and if Eloqua can’t deliver, Oracle may see some losses.
However, the purchase of Eloqua looks like a smart move on Oracle’s part, at least right now. As Oracle moves its business into the cloud realm, it will need tools to attract users, and Eloqua’s marketing tools may work for just that. Also, Eloqua already has over 1,000 clients, which Oracle may be able to entice with an offer of continued Eloqua services, but on a new cloud platform. Though Oracle is paying a pretty penny and large premium for the company, it stands to pay off.
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