NetSuite's Share Price Hangs In The Balance As Tender Offer Deadline Looms

As the deadline for NetSuite Inc N Oracle Corp. ORCL's tender offer expires on November 4, sentiments remain weak on the possibility of the transaction coming through. Since the company indicated the final offer price of $109 a share on October 7, the stock has dropped about 18 percent.

As several analysts have already expressed their opinions, Barclays joined them in expressing doubts whether enough shares would be tendered, as Oracle needs 22 percent unaffiliated shares to complete the transaction. Barclays analyst Raim Lenschow pointed out the big gap between Oracle’s offer price and T. Row Price’s demand for $133 per share raising doubts about the possibility of the deal getting completed. As a result, the analyst feels NetSuite shares will be impacted meaningfully.

On a standalone basis, the brokerage cited the two straight quarterly misses and the uncertainty in acquisition, which could weaken the billings. The firm is worried about the miss in subscription revenue in the last two quarters. Furthermore, it pointing out that the company would not be able to meet its previous forecast for the full year.

As a result, the valuation would be standardized for NetSuite on a standalone basis. “We think that investors need to begin considering valuation levels for NetSuite should the deal collapse. In this report, we have provided an in-depth sensitivity analysis on potential share prices for a stand-alone NetSuite relative to a given EV/Sales multiple and level of revenue growth. Given the current comp situation, our high-level analysis seems to indicate a potential range of $60–80,” Barclays said in a research note.

At last check, NetSuite shares traded down 0.22 percent to $88.96 while Oracle stock had gained 0.76 percent on the day to $38.37.