Oracle Corp. plans to acquire MetaSolv Inc. for $219.2 million in a cash merger that only 51 percent of MetaSolv stockholders would need to approve.
MetaSolv went out looking for buyers in August, CEO Curtis Holmes said, after a year of considering its options in a changing OSS market that has seen high-profile mergers like the Amdocs Ltd-Cramer Systems deal create consolidated front office/back office and service fulfillment suites.
"There's continued softness of spending and industry consolidation," he said. "There is thus also a rising cost to maintain our position in the market." The first problem is MeatSolv's mostly domestic focus. Because customers increasingly want global reach, MetaSolv found itself in the position of needing to make investments in sales, marketing and infrastructure in Asia-Pacific and Europe. "When you think about where we have to grow the business, it takes a lot of investment," said Holmes.
The OSS vendor also considered its portfolio. "We would have had limited resources to compete with the large-scale players entering this space," said Holmes. "We looked at our portfolio and recognized a need to invest in that in a much greater way."
Now, Oracle will integrate MetaSolv's OSS service fulfillment suite for provisioning, network inventory and activation with its own portfolio to create a "campaign-to-cash" solution for service providers. The platform will optimize asset lifecycles and accelerate time-to-market of new products and services, the companies said in a statement.
Thus MetaSolv examined the logistics of staying a standalone company and also considered acquisition targets, but ultimately settled on an exit strategy, and began soliciting offers.
Oracle was the highest bidder in the process. However, if a superior bid comes in before the deal closes, MetaSolv's board of directors would have an obligation to consider it. A standard breakup fee of 3.75 percent would be charged in the event of the deal falling apart.
After the closing of the transaction, MetaSolv's employees will join Oracle's Communications Global Business Unit. Holmes said Oracle will retain the "vast majority" of MetaSolv employees, who bring needed expertise and skills in what will be a new area for Oracle.
The agreement is subject to stockholder and regulatory approval and is expected to close in late 2006 or early 2007.
MetaSolv Inc. www.metasolv.com
Oracle Corp. www.oracle.com
