What happened
Shares of Cerner (NASDAQ:CERN) surged 13% on Friday, as rumors of a potential merger with Oracle (NYSE:ORCL) swirled.
So what
Oracle could soon move to acquire Cerner for as much as $30 billion, according to The Wall Street Journal. The deal would allow Oracle to make an aggressive move into the $4 trillion healthcare industry.
Investors are excited about the potential combination of Oracle’s cloud technology and Cerner’s health information services. Image source: Getty Images.
Oracle’s stock price recently hit an all-time high following its fiscal 2022 second-quarter results. Investors applauded the progress the software giant is making with its cloud initiatives. Oracle’s total cloud revenue jumped 22%, to $2.7 billion, in the quarter.
Purchasing Cerner could help Oracle advance its cloud strategy, by giving it a leading presence in electronic medical records. Oracle, in turn, could help to accelerate Cerner’s transition to the cloud. That could potentially provide cost savings to medical professionals, many of whom rely on Cerner’s software to store and analyze healthcare data, while also improving the company’s profit margins in the process.
Now what
Buying Cerner would be a bold move for Oracle. If a merger were to be consummated, it would likely be the largest, by far, in its history. Oracle’s largest acquisition to date was its $8.7 billion purchase of NetSuite in 2016.
Moreover, investors should be hesitant to speculate on either company’s stock solely in hopes that a deal will be completed. Neither Cerner nor Oracle responded to the Journal‘s request for comment, and it’s possible that a merger agreement will not be reached.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.
