Oracle agrees to acquire MetaSolv

Software giant Oracle announced at its Oracle Openworld conference in San Francisco today that it has agreed to acquire MetaSolv Software, a provider of service provisioning, fulfillment and other OSS functions, for $219.2 million in cash. The deal brings Oracle further into the back office realm.

Curtis Holmes, president and CEO of MetaSolv, said on a conference call announcing the deal to MetaSolv analysts and media that all of MetaSolv’s customers currently are Oracle customers. He said MetaSolv brings Oracle OSS/BSS functions specifically focused in service provisioning, network inventory and service activation where it currently has a gap. MetaSolv’s offerings will become part of a software family that includes other properties acquired from PeopleSoft, Seibel Systems and Portal Software.

Holmes added that Oracle’s scale will help MetaSolv expand globally at a time when network operators worldwide are pursuing OSS transformation projects, but during which carrier consolidation and generally soft spending make it difficult for a large number of companies to effectively compete. “The deal is great timing as the industry goes through a massive transformation,” Holmes said. “This deal will allow us to accelerate our strategic mission. We’re really able to expand our profile in the global marketplace.”

MetaSolv officials said on the call that the companies began exploring an acquisition in August. They said there also was interest from other bidders in doing a deal with MetaSolv, though they declined to specify further details. Holmes said the deal is being submitted to shareholders, and upon shareholder and regulatory approval it is expected to close in late 2006 or early 2007. There is a break-up fee of 3.75% of the acquisition price if the deal fails to go through.

Holmes said MetaSolv actually explored “several strategic options” over the last year before it decided to sell to Oracle for what amounts to a price of about $4.10 per share, a price which was criticized as being low by financial analysts who dialed in for the conference call. One of those analysts called the deal “disappointing” during the call.

Oracle, on the other hand, seemed pretty pleased by its new purchase. "By adding a leading OSS application suite, Oracle plans to offer a fully integrated, end-to-end productized solution that will help service providers streamline the 'campaign to cash' process, optimize asset lifecycles and accelerate time-to-market of new products and services," said Bhaskar Gorti, senior vice president and general manager of Oracle’s Communications Global Business Unit, in a statement. "Conventional, customized solutions have proven inefficient, inflexible and costly. Oracle is putting service providers in control to simplify their infrastructure, deliver more services faster and drive brand loyalty."

After the closing of the transaction, MetaSolv's employees will join Oracle's Communications Global Business Unit.