Published: Fri, September 09, 2016
Economy | By Melissa Porter

Rowe Price opposes sale to Oracle

Rowe Price opposes sale to Oracle

T. Rowe Price, NetSuite's largest outside shareholder, said it would not tender its shares in Oracle's proposed acquisition of the USA cloud computing company, arguing the $9.3 billion deal undervalues it.

Netsuite's largest institutional shareholder wants to block Oracle's $9.3 billion acquisition of the company, arguing that the deal undervalues Netsuite and that Oracle CEO Larry Ellison's relationship with Netsuite presents a major conflict of interest. T. Rowe Price, owner of approximately 14.5 million shares of NetSuites's common stock, said they were not persuaded by Netsuite's arguments in support of the Oracle offer price.

"In our view, the inherent conflicts of interest between NetSuite, the Ellison entities and Oracle are daunting and may be impossible to manage", T. Rowe Price wrote in a letter to NetSuite's board. Furthermore, the Oracle bid does not take into account potential synergies from the integration of NetSuite, and Oracle's existing stake in the company may be scaring off rival bidders, the letter said.

Shares of Netsuite and Oracle were essentially unchanged in midday trading on Wednesday.

In its letter, T. Rowe said none of its portfolio managers would tender shares by a September 15 deadline in favor of the deal. The offer is conditioned on both the receipt of a majority of shares outstanding and a majority of those not held by Ellison or NetSuite insiders and employees. As the company's largest shareholder after Ellison with an 18 percent stake, T. Rowe could significantly influence the outcome.

It is rare for a large mutual fund manager to intervene in such a public way.

That elevates T. Rowe's clout.

NetSuite's board has stood behind the deal, recommending shareholders accept Oracle's proposal. It's offering $109 a share in cash, a 19 percent premium to NetSuite shares at the time.

It added: "We were disappointed to see in the tender offer document that NetSuite did not undertake an outbound market check with inquiries to other logical purchasers before agreeing to Oracle's offer".

Oracle has not yet responded to SiliconBeat's request for comment.

Like this: