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Business software maker Oracle Corp. Said Monday that it would acquire Cerner Corp. for $ 28.3 billion in the largest transaction ever, giving it access to large amounts of data from one of the largest healthcare IT companies in the United States.
Cerner shareholders will receive $ 95 in cash per share they hold. This corresponds to a premium of 5.8% of the company’s final closing price.
Oracle will be able to use data from Cerner to train and improve software makers’ artificial intelligence-based cloud services. This will bring benefits to Oracle and may attract more healthcare clients to the cloud platform.
Traditionally, software was running in the customer’s data center, and Cerner began migrating its services to cloud computing providers. In 2019, Amazon.com, Inc. Amazon Web Services has been selected as the “priority” cloud provider.
However, Oracle announced on Monday that it will move Cerner’s software to its own cloud computing service and use tools such as voice assistants to update Cerner’s apps.
“This can be done very quickly because the most important clinical system in Cerner’s largest business is already running in the Oracle database,” said Mike Sicilian, executive vice president of vertical industry at Oracle. I will. “
Amazon Web Services did not immediately respond to Reuters’ request for comment.
“If Oracle moves all Cerners to the Oracle cloud, it could have unmanageable cost savings,” said Logan Park, an analyst at Edward Jones. Oracle is a competing platform because switching costs can be high due to customer development of apps in the cloud.
“This will provide Oracle with a leading product for healthcare customers, while minimizing customer friction,” Purk added.
Oracle said the deal, which is likely to close in 2022, is expected to lead to revenue growth as Cerner’s business expands to more countries. Cerner is expected to increase adjusted revenue for the first full year and then make a “significant” contribution.
Cerner’s share rose about 1%, while Oracle’s share fell about 4% to $ 92.93.
Analysts believe that health care has become a difficult issue for tech players as the demand for cloud-based solutions has increased during the pandemic, which has led to a surge in investment in this sector.
This is also shown by Microsoft’s offer to acquire Nuance Communications. This is because tech giants are trying to take advantage of the booming sector.
By Chavi Mehta
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