Can bitter rivals become marriage partners? HP (NYSE:HPQ) and Oracle (NASDAQ:ORCL) have done nothing but spar over the past year as Oracle hired ousted HP CEO Mark Hurd, HP lambasted Oracle for dropping support of the Intel Itanium platform, ex-HP channel chief Adrian Jones signed up with Oracle and Oracle CEO Larry Ellison publicly and colorfully criticized the HP board of directors on more than one occasion. Now as HP contemplates spinning off its PC business and has committed to paying way too much for a software company, one analyst points to several reasons why it may be a good idea for Oracle to acquire HP. Here's what Bernstein Research's Toni Sacconaghi says about why Oracle may want to acquire HP
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Silicon Valley's Maverick Oracle CEO Larry Ellison is "unpredictable and buying HP and creating the largest tech company in the world would be a crowning jewel for the 'maverick' in Silicon Valley."
Familiar Faces Former HP CEO and current Oracle co-president Mark Hurd understands HP's business, staff and culture better than anyone, and would do a great job of running the company.
The Promise of the Integrated Stack Oracle wants to offer fully integrated solutions -- a complete stack. An HP acquisition would help. Bernstein would expect Oracle to still spin off the HP business.
Follow the Money Such a deal would offer lots of opportunity for value creation, including cost synergies, improved operating performance, and portfolio divestments and spin outs, according to Bernstein.
Location, Location and Location The two companies' headquarters are less than 15 miles apart, which would help with integration.
Follow the Money, Part II The deal would be financially attractive for Oracle, according to Bernstein, which is assuming a 50 percent premium and 25 percent/75 percent cash/stock financing structure.
Follow the Money, Part III Such a deal would be significantly accretive to Oracle's earnings -- more than 50 cents a share at minimum.
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