Oracle on Wednesday announced that, more than five months since the deal was first announced, all necessary antitrust and other regulatory approvals have been secured for its proposed purchase of Cerner, and that the acquisition should be finalized early next week.
WHY IT MATTERS
Most notably, that includes the unconditional antitrust clearance from the European Commission clearance that Oracle gained this past week. Earlier this year, the window for the Federal Trade Commission and the Department of Justice’s own review of the deal had been extended to Feb. 22.
With those approvals in hand, Oracle says it now expects to complete the acquisition with an all-cash tender offer for $95 per share, totalling approximately $28.3 billion, that’s immediately accretive to Oracle’s earnings.
The company says it expects the deal to close next week, on June 6, subject to the conditions described in the statement filed with the Securities and Exchange Commission on January 19, and presuming other closing conditions are met.
“We expect this acquisition to be substantially accretive to Oracle’s earnings on a non-GAAP basis in fiscal year 2023,” said Oracle CEO Safra Catz in a statement. “Healthcare is the world’s largest and most important vertical market – $3.8 trillion last year in the United States alone. We expect Cerner to be a huge growth engine for years to come.”
THE LARGER TREND
The Cerner acquisition, whose price tag has remained unchanged since it was first announced in December 2021 is a big deal. It’s three times as pricey as the company’s next-biggest purchase, a then-landmark acquisition of PeopleSoft for $10.3 billion in 2005.
Indeed, it’s one of the biggest software M&As ever – just slightly smaller than IBM’s $34 billion acquisition of Red Hat in 2018 and bigger than Microsoft’s $20 billion Nuance buy this past year.
Clearly, the computing giant is bullish on what the addition of Cerner, with its own cloud infrastructure and troves of health data, can do for its business.
As Forrester senior analyst Natalie Schibell told Healthcare IT News in December, its success will be decided by how well Oracle is able to manage this “cloud-first strategy for harnessing the power of data that sits outside of the electronic health record.”
As she explained “an Oracle-Cerner deal would require Oracle to push the throttle on Cerner’s move to the cloud to drive a new paradigm of data-driven healthcare.”
Oracle has its work cut out for it as it learns the ropes of a complex and competitive healthcare market, but in the near term, it looks confident about what it can do with such a significant addition to its technology portfolio.
“Oracle’s Autonomous Database, APEX low-code development tools, and voice-enabled user interface enable us to rapidly modernize Cerner’s systems and move them to our next-generation Cloud,” said Mike Sicilia, Oracle’s EVP of Industries, in a statement about the merger’s approval.
“This can be done very quickly because Cerner’s largest business and most important clinical system already runs on the Oracle Database,” he said. “No change required there. What will change is the user interface. We will make Cerner’s systems much easier to learn and use by making hands-free voice technology the primary interface to Cerner’s clinical systems.”
ON THE RECORD
“Working together, Cerner and Oracle have the capability to transform healthcare delivery by providing medical professionals with a new generation of healthcare information systems,” said Larry Ellison, Oracle’s co-founder, chairman and CTO, in a statement.
“Better information enables better treatment decisions resulting in better patient outcomes,” said Ellison, who will speak about the deal during a virtual live event scheduled for June 9 at 4 p.m. ET. “Our new, easy-to-use systems are designed to lower the administrative workload burdening our medical professionals while improving patient privacy and lowering overall healthcare costs.”
“Cerner has been a leader in helping digitize medical care, and now it’s time to realize the real promise of that work with the care delivery tools that get information to the right caregivers at the right time,” added Cerner CEO David Feinberg. “Joining Oracle as a dedicated Industry Business Unit provides an unprecedented opportunity to accelerate our work modernizing electronic health records, improving the caregiver experience, and enabling more connected, high-quality and efficient patient care.”
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Healthcare IT News is a HIMSS publication.
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