Oracle's RightNow Buy Approved - Analyst Blog

At a recent special meeting conducted at RightNow Technologies, Inc. (RNOW), its shareholders finally gave their whole-hearted consent for the company’s merger with Oracle Corporation (ORCL). Almost 99.8% of the shares voted in favor of the acquisition agreement represented around 87% of shares outstanding for RNOW as of November 8, 2011.

Previously agreed upon terms were retained as Oracle will pay around $1.5 billion net in cash and debt and $43.0/share, which was at a premium of close to 20% on RNOW’s closing price of $35.96 on October 21, 2011.

Oracle is a computer technology firm which develops and markets database management systems and other enterprise software products and hardware systems catering to clients worldwide. In 2007, the company earned the third largest software revenue after Microsoft Corp. (MSFT) and International Business Missions Corp. (IBM).

The acquisition was proposed long back on October 24, 2011 and since then, the future of RightNow Tech. and its shareholders’ interests were hanging fire. The transaction, contingent on a number of stockholders’ consents, regulatory approvals and customary closing regulations was subject to unavoidable delay which had widespread negative implications with regard to both external and internal business relationships of the company.

Moreover, if the transaction were to be canceled, it would have resulted in the payment of approximately $59.7 million as termination fees. This would have been tremendously detrimental for the company’s expenditures, not to mention the bad publicity it would have earned, which would have undermined the company’s goodwill.

Earlier, RightNow reported results for the third quarter. Revenues were up 19% year over year to around $57.7 million and net diluted earnings per share came in at 4 cents falling from 9 cents in the previous year quarter. The company generated cash and investment balances of about $242 million.

RightNow Technologies Inc., established in 1995 and headquartered in Bozeman, Montana, is a leader in providing customer relationship management (CRM) software solutions aimed to refine and modernize customer service operations. These services cater to industries including technology, consumer goods, public sector, manufacturing and many others. It has clients all over the world with a current employee database of 1,033.

We have a Neutral recommendation on RightNow Technologies Inc. over the long term. Currently, RNOW has a Zacks #3 Rank, which implies a Hold rating on a short-term basis.

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