Oracle to acquire Cerner in its biggest acquisition ever
The $28 billion deal should help the enterprise software giant draw more healthcare clients to its cloud platform
Business software vendor Oracle Corp announced on Monday that it is buying electronic medical records firm Cerner in an all-cash deal valued at about $28.3 billion.
Oracle will pay $95 in cash for each Cerner share, representing a premium of 20 per cent over Cerner's market value last Thursday, when the deal talks first became public.
Oracle said that the acquisition should be "immediately accretive to Oracle's earnings" on an adjusted basis in the first full fiscal year after closing and contribute "substantially more" thereafter.
The deal is expected to close next year.
The acquisition is the biggest ever for Oracle, the previous record being set by its $9.3 billion purchase of NetSuite in 2016.
Shares of Oracle closed down 5 per cent on Monday while Cerner shares were up 1 per cent, after the deal was announced.
Kansas City, Missouri-based Cerner is a significant supplier of medical equipment, software and hardware. Hospitals and physicians offices use Cerner software to store, manage and share medical and health data.
Oracle said it expects the deal to add to revenue growth as it expands Cerner's business into more countries. The deal would help Oracle boost its presence in the healthcare sector, giving it access to a trove of data from one of the largest healthcare IT firms in the US. The company would be able to use the data to train and improve its artificial intelligence-based cloud services.
In the long run, this is expected to enable Oracle to draw more healthcare clients to its cloud platform.
"Working together, Cerner and Oracle have the capacity to transform healthcare delivery by providing medical professionals with better information—enabling them to make better treatment decisions resulting in better patient outcomes," said Larry Ellison, chairman and CTO at Oracle.
"With this acquisition, Oracle's corporate mission expands to assume the responsibility to provide our overworked medical professionals with a new generation of easier-to-use digital tools that enable access to information via a hands-free voice interface to secure cloud applications. This new generation of medical information systems promises to lower the administrative workload burdening our medical professionals, improve patient privacy and outcomes, and lower overall healthcare costs."
In recent years, Cerner had started moving its service to cloud computing providers and chose AWS as its "preferred" cloud provider in 2019. However, Oracle stated on Monday that it would shift Cerner's software to its own cloud computing service and modernise Cerner's apps with tools such as a voice assistant.
Lately, tech firms have started to ramp up investment in the health care sector as the demand for cloud-based solutions continues to increase, specifically since March last year, after the spread of coronavirus.
In April, Microsoft announced that it was buying AI speech recognition firm Nuance Communications for $19.7 billion.
With this acquisition, Microsoft intends to combine solutions and expertise to boost its cloud healthcare business. The move could also allow Microsoft to expand the technology beyond healthcare industry.