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As Oracle’s Offer Flounders, What’s Next for NetSuite?

Oracle Corp. has set a hard deadline of Nov. 4 for shareholders in NetSuite to accept or reject its $9.3 billion offer to purchase the cloud financial software maker. That puts the pressure on T. Rowe Price, an 18% shareholder in the company, to accept a deal it has so far rejected. The mutual fund firm contends that Oracle founder Larry Ellison’s 40% stake in NetSuite prevented NetSuite from negotiating a fair price.

T. Rowe Price may come to regret its stance. Growth in NetSuite’s recurring revenue from software subscriptions, the most important metric, slowed to 26% in the most recent quarter, from 34% in March of last year. That suggests NetSuite needs Oracle a lot more than Oracle needs NetSuite.

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To be sure, Oracle’s own cloud software efforts are progressing well enough to satisfy most investors. The company is also is under pressure from its own investors to increase its dividend yield. Mr. Ellison could decide to return cash to shareholders and boost share prices rather than buy NetSuite. But it’s unlikely that an SAP or an IBM would want NetSuite if growth continues to slow.

In any case, given how dire NetSuite’s growth situation is, it’s Mr. Ellison’s move.

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Much of NetSuite’s growth in recent quarters came from its acquisition of Bronto Software, a marketing software firm.