Oracle Counters SAP Cloud Plan With Taleo Bid

Responding to SAP's (delayed) SuccessFactors deal and's rapid growth, Oracle makes a $1.9 billion deal in the cloud-computing arena.
Oracle announced Thursday that it plans to acquire Taleo, which provides a cloud-delivered human capital management (HCM) application.

The $1.9 billion deal is expected to bolster Oracle's presence in two fast-growing markets, cloud-computing and HCM. It also answers SAP's $3.4 billion bid to acquire SuccessFactors, a deal that has yet to be consummated.

Taleo's Talent Management Cloud applications help employers manage their human resource costs and workforce, from attracting and developing employees, to setting goals and measuring performance, to incenting performance and retention through pay plans and career-path development.

Oracle already has several HCM offerings, most notably including PeopleSoft on-premises software and Oracle Fusion HCM in the cloud. But Fusion was released last year and has yet to gain market share. Taleo, a 12-year-old firm based in Dublin, Calif., has more than 5,000 customer firms and racked up $291 million in revenue entirely through the cloud in 2011.

[ Want more on SAP's SuccessFactors deal? Read Should SAP + SuccessFactors Worry ]

"Together, Oracle and Taleo expect to create a comprehensive cloud offering for organizations to manage their human resource operations and employee careers," said Oracle executive VP Thomas Kurian in a statement.

Oracle's acquisition is expected to close by mid 2012. The offer of $46 per share is an 18% premium over Taleo's Wednesday stock close price. SAP, in contrast, offered a 52% premium with its December offer for SuccessFactors. SuccessFactors has about 3,500 customers firms and $330 million in revenue.

SAP's purchase of SuccessFactors has been repeatedly delayed as it awaits approval from the Committee on Foreign Investment in the United States. SAP, which is based in Germany, has extended its deadline four times for that reason.

Oracle's latest move is, in large measure, a response to SAP's plans, but both software giants are responding to faster-than-expected growth of cloud-delivered applications and, in particular, the threat of Salesforce is expected to report more than $2 billion in revenue later this month when it reveals results for its latest fiscal year. That makes it more than six times larger than either SuccessFactors or Taleo.

Taleo is Oracle's second major acquisition in the cloud-computing market in recent months. In October, Oracle offered $1.5 billion to acquire CRM vendor RightNow. That deal was finalized late last month, and Oracle laid out plans to integrate RightNow's service with capabilities from Oracle products including its Siebel Marketing application and the ATG Commerce platform.

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