Oracle close to buying hospitality-industry software provider Micros Systems for more than $5B
Oracle Said to Near Deal to Buy Micros Systems — Oracle Corp. (ORCL) is nearing a deal to buy hospitality-industry software provider Micros Systems Inc. (MCRS) for more than $5 billion, people familiar with the matter said.
Context & Ripple Effects
Oracle has been on an acquisition run aimed at owning complete business functions rather than just the database underneath them: last December it paid $1.5 billion, a 38 percent premium, for marketing-software maker Responsys, its clearest move yet into vertical applications. A purchase of Micros Systems at more than $5 billion — reported by Bloomberg as a near-done deal according to people familiar, and still unconfirmed by either company — would be roughly three times the Responsys price and put Oracle inside hotels and restaurants via point-of-sale and property-management systems.
The story travelled unusually wide for a pre-announcement report: Mercury News, The Register, VentureBeat, eWeek, SiliconBeat, bizjournals, Business Insider and TheStreet all carried it on or about the same day, reflecting how directly it bears on the question of whether Oracle's cloud pivot can be bought rather than built.
First-order effects
- Micros shareholders and its hospitality customers face an ownership change that would fold a standalone hotel-and-restaurant systems vendor into Oracle's applications portfolio, pending a deal neither company has confirmed.
- Oracle's applications group gains an installed base of physical venues — POS terminals and property-management deployments — that complements the marketing-cloud capability acquired through Responsys.
Second-order effects
- Rivals selling property-management and point-of-suite software to hotel chains would be forced to respond to an Oracle-backed competitor that can bundle hospitality apps with database, middleware and infrastructure contracts.
- Micros' hardware-and-software channel — resellers and integrators serving restaurants and hotels — becomes a distribution asset Oracle could reuse for other vertical offerings, repricing access to that channel for other enterprise vendors.
Third-order effects
- If the pattern of Responsys-then-Micros holds, large-cap software firms consolidate mid-cap vertical-application specialists wholesale, shifting the industry toward suites sold by function and industry rather than horizontally.
- Hospitality technology, long fragmented among niche vendors, moves toward consolidation under generalist acquirers — raising the prospect of regulatory attention if a few platforms come to own both the back office and the guest-facing terminal.
The trend: Enterprise software is consolidating vertically: Oracle is paying progressively larger premiums for industry-specific application vendors, moving from marketing cloud to hospitality operations.