Oracle At it Again? Rumors of a Hyperion Buyout Emerge

Includes: HYSL, ORCL
by: William Trent, CFA

We generally think Oracle’s (NYSE:ORCL) acquisition strategy is the right thing for the company and for the industry. Software companies are generally under-leveraged, and even paying for the acquisition in cash would leave the company with very little net debt and combined annual cash flows of nearly $4 billion to offset the current debt of $5.7 billion. So we say they were overdue for another big buyout. And they're right on schedule, according to the New York Times, Oracle to buy Hyperion for $3B:

Oracle Corp., the world’s top database software maker, is near an agreement to buy Hyperion Solutions Corp., which makes software that lets companies analyze and track their performance, for about $3 billion, The New York Times said on Wednesday in its online edition.

If the rumors are correct, the buyout price would be around $50 per Hyperion (HYSL) share, about a 25% premium to the closing price. Given that its shares were already up 30% since issuing a strong outlook in January, its shareholders ought to be pretty happy right now.

HYSL 1-yr chart:

HYSL 1-yr chart

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