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Does Oracle Have the Hots for Accenture?

Ray Le Maistre
3/29/2017

Here's some M&A speculation that will leave tech community mouths agape: Oracle is sizing up a potential bid to acquire global system integrator Accenture.

According to a report from tech industry news site The Register, Oracle Corp. (Nasdaq: ORCL) has hired M&A assessment specialists to do due diligence ground work on whether a bid for Accenture makes sense.

It's not like the two companies aren't already very familiar with each other -- they already have a joint business group venture "to jointly help customers embrace the cloud to achieve their digital transformation goals."

And even without any consultant input, Oracle will know that Accenture would not come cheap: The systems integrator has just reported a 5% year-on-year increase in fiscal second-quarter revenues to $8.3 billion and a similar increase in operating profits to $1.14 billion and currently commands a market value of $75.3 billion -- any reasonable bid would need to be some way north of that figure.

Oracle also recently reported its latest quarterly financials: Its fiscal third quarter revenues (non-GAAP) were up 3% year-on-year to $9.3 billion, while operating income was also up by 3% to $3.9 billion. (See Oracle's Cloud Transition Pays Off.)

The speculation helped to give Accenture's stock a lift late Wednesday, by 1.64% to $121.35, while Oracle stock was down a "smidgen" -- that's a technical term for a 0.33% shift -- to $44.69.

The Register report made it clear that, according to its sources, this is very early stages in a process that may come to nothing -- but the suggestion that such an evaluation has even started is of interest to an awful lot of people across all industry verticals.

And it's not a welcome move, according to Telefónica Global CIO Phil Jordan, who tweeted:

And why would Oracle want to get jiggy with Accenture anyway? Well, the future of profitable technology-related businesses revolves around generating sales and margins from software and supporting professional services, including systems integration. Accenture is one of the world's largest systems integrators, while Oracle is one of its biggest software firms. On that basis, a coming together makes sense. In practice, merging two corporate beasts successfully is the work of the devil.

Neither Accenture nor Oracle had responded to requests for comment as this article was published but you can bet the response will be akin to: "We don't comment on rumor or speculation."

— Ray Le Maistre, Circle me on Google+ Follow me on TwitterVisit my LinkedIn profile, International Group Editor, Light Reading

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James_B_Crawshaw
James_B_Crawshaw
3/29/2017 | 3:18:38 PM
Re: Is Phil Jordan a bellwether?
Buying EDS worked out so badly for HP that I'd be surprised if Mark Hurd were to repeat that mistake with Oracle and Accenture. Think of all the SAP integration business that Accenture would lose to competitors if it were acquired by Oracle!
Ray@LR
[email protected]
3/29/2017 | 8:24:13 AM
Is Phil Jordan a bellwether?
Is Phil Jordan a bellwether for the feeling on this? Or is he an outlier?

WOuld you welcome an Oracle acquisition of Accenture?
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