Oracle Gets Into Cloud-Based HR Space With $1.9 Billion Deal For Taleo

Technology giant Oracle is making a big move into the HR software sector.

Today, Oracle announced a that it had “scooped up human-resources software maker Taleo,” as Fox Business put it, “in a $1.9 billion transaction that underscores the growing demand for cloud-related companies.”

Oracle agreed to pay $46 a share for Dublin, Cailf.-based Taleo, representing a 18 percent premium over the company’s Thursday closing share price of $38.94.

The San Jose Mercury News added some context and background to the deal:

After completing its $1.5 billion acquisition of RightNow Technologies last month, Oracle has now agreed to purchase two software-as-a-service, or SaaS, companies for roughly the same price its main rival, software giant SAP, agreed to pay for its cloud venture, San Mateo’s SuccessFactors.

While RightNow’s software focuses on customer service, Taleo offers human-resources software that runs on servers separate from the companies that purchase their product, the essence of cloud offerings. Founded in 1999, the company boasts on its website of servicing 5,000 leading companies, including almost half of the Fortune 100 and nearly half of the top 30 career sites in the world.”

More competition with Salesforce

As Fox Business described it:

The deal will plunge Oracle into even deeper competition with Salesforce.com … which provides web-based software for the management of sales, marketing and customer service.

By acquiring Taleo, Oracle said it will now be able to create a comprehensive cloud offering that will help companies manage their human-relations operations and employee careers.”

“Human capital management has become a strategic initiative for organizations,” said Thomas Kurian, Executive Vice President, Oracle Development, in a press release announcing the deal. “Taleo’s industry leading talent management cloud is an important addition to the Oracle Public Cloud.”

“Taleo’s integrated cloud-based talent management solutions optimize how organizations hire, manage, develop and reward their employees and gives companies the intelligence needed to capitalize on their most critical asset — their people,” added Michael Gregoire, Chairman and CEO of Taleo. “Joining forces with Oracle gives us the opportunity to better serve our customers.”

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Latest in series of cloud-based acquisitions

Forbes noted that, “This deal is just the latest in a series of acquisitions of cloud-based enterprise software providers, including SAP’s pending deal to buy SuccessFactors for $3.4 billion and Oracle’s own $1.5 billion acquisition of RightNow. Expect this deal to spur a wave of speculation on who might be next in line.”

The Wall Street Journal added this observation:

Many analysts assumed that business-software giants like SAP and Oracle would eventually buy smaller cloud-based vendors, just as they snapped up smaller suppliers of conventional business software. Analysts also assumed that they would wait for their targets to mature and for valuations to come down, but instead businesses are buying online software at a faster rate than predicted.”

And as Jason Corsello, vice president of corporate development and strategy for learning and talent management software provider Cornerstone OnDemand, told TLNT:

Cloud based technologies have enable HR to control their destiny and closely align people, process and technology. Taleo and SuccessFactors now become “system of record” dependent and therefore customers will likely be locked into a single ERP stack where IT will regain sole control over technology decisions. Unfortunately, technology decisions then become focus on what’s best for IT and how the technology fits the data center versus what is the right solution to meet the business needs and accelerate the strategy.

All four companies, Oracle, SAP, Taleo and SuccessFactors, will be focused on blending the companies and people, determining what products survive, integrating the architectures, figuring out what and how to sell their overlapping product lines, etc. We are precisely focused on innovating and meeting the needs of our customers. We think innovation trumps integration.”

The Board of Directors of Taleo has unanimously approved the transaction, and it  is expected to close sometime the middle of this year, subject to Taleo stockholder approval, certain regulatory approvals, and other customary closing conditions.

John Hollon is Editor-at-Large at ERE Media and was the founding Editor of TLNT.com. A longtime newspaper, magazine, and business journal editor, John has deep roots in the talent management space. He's the former Editor of Workforce Management magazine and workforce.com, served as Editor of RecruitingDaily, and was Vice President for Content at HR technology firm Checkster. An award-winning journalist, John has written extensively about HR, talent management, leadership, and smart business practices, including for the popular Fistful of Talent blog. Contact him at johnhollon@ere.net, connect with him on LinkedIn, or follow him on Twitter @johnhollon.

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