Oracle's (Nasdaq: ORCL) insatiable appetite for acquisitions has something new to snack on this morning. The enterprise software giant is buying Art Technology Group (Nasdaq: ARTG) for $6 a share in cash.
I wrote about ATG a few months ago, when I recommended the stock as one of my 5 Stocks Under $10 in June.
Here's what I wrote at the time:
There is no denying that e-commerce is here to stay, and ATG helps support business-to-business and business-to-consumer online initiatives. As more companies turn to cyberspace to drum up sales, ATG is there to efficiently serve up targeted content.
ATG has been consistently profitable over the years, despite its tiny share price. It's no slouch. Analysts are looking for a profit of $0.21 a share this year and $0.25 a share next year.
ATG shares were fetching $3.67 at the time -- and closed at $4.10 yesterday -- so the buyout comes at a healthy premium.
In copycat fashion, several other companies that help companies improve their e-commerce operations -- including GSI Commerce (Nasdaq: GSIC) and live chat leader LivePerson (Nasdaq: LPSN) -- opened higher on this morning's news.
ATG is a good fit for an Oracle that doesn't exactly have discriminating tastes given its penchant for buffet-style buyouts. Oracle is an enterprise software giant, so it has a thick Rolodex that it can use to promote ATG's web-enhancing services.
It's also probably a good time for ATG to cash out. Wall Street sees it earning $0.20 a share this year and $0.24 a share come 2011 -- slightly less than what the pros were forecasting five months ago.
ATG also announced its quarterly results this morning. Revenue climbed 16%, but its operating profit and pre-tax earnings declined. It's a mixed showing, but ATG is off the hook with Oracle's engagement ring on its finger.
Is this the start of a new bidding war? I don't see it happening. IBM (NYSE: IBM), a vindictive Hewlett-Packard (NYSE: HPQ), and perhaps even a diversification-hungry eBay (Nasdaq: EBAY) have the financial resources to raise their bidding cards, but there's no point in chasing ATG's price any higher. GSI Commerce, LivePerson, and a slew of privately held upstarts can probably be had without calling in on auctioneer.
It's a good deal for ATG shareholders, cashed out at a price level last seen during the sudsy dot-com bubble days of 2001. It's a good deal for Oracle. It may not be accretive to earnings right away, but Oracle should be able to grow ATG's visibility tremendously in the coming years.
It's going to be a happy wedding. Speculators can now begin wagering on who will catch the heaved bouquet next.
What do you think the next tech buyout will be? Share your thoughts in the comment box below.
