Oracle Acquires Taleo for $1.9 Billion
Updated · Feb 09, 2012
Oracle announced today that it plans to acquire Dublin, Calif.-based Taleo for $1.9 billion, or $46 a share. The move will bring Taleo’s cloud-based talent management technology to the Oracle Public Cloud platform.
“Human capital management has become a strategic initiative for organizations,” said Thomas Kurian, executive vice president of Oracle Development. “Taleo’s industry-leading talent management cloud is an important addition to the Oracle Public Cloud.”
Kurian’s words take on added weight upon surveying the market. Currently, Oracle finds itself amid feverish deal-making in the human capital management (HCM) space while it tries to put distance between itself and disappointing quarterly earnings.
Oracle’s Fighting Words
The HCM market began heating up shortly after Oracle launched Oracle Public Cloud at OpenWorld in October, with Salesforce.com squarely in its crosshairs. Describing Public Cloud as a bastion of data and application portability, Oracle CEO Larry Ellison, drew sharp contrast between his company’s platform and the competition, using language colorful even by his standards.
“Salesforce is the ultimate vendor lock-in, you can check in, but you can’t check out,” he said. “I like to think of it as the roach motel of clouds.”
In December, Salesforce.com acquired HCM specialist Rypple, a company that employs badges and achievements to imbue the employee review process with a collaborative, social media-like experience. Financial terms were not disclosed.
A week before the Rypple buy, SAP made waves by acquiring cloud-based HCM firm SuccessFactors for $3.4 billion. In an acquisition that was described as “aggressive” by analysts, SAP snapped up a company with 15 million subscription seats and more than 3,500 customers in 168 countries.
What Taleo Brings to the Table
Slides from a Taleo presentation (PDF) outlining the deal reveal what the company offers Oracle as it seeks to bolster its cloud offerings.
Taleo lays claim to “one of the world’s largest cloud deployments with nearly 16 billion transactions per year.” Also, according to the company, it manages 15 percent of all hires in the United States and has a customer base comprised of 5,000 businesses including such big names as JP Morgan Chase, Starbucks, Best Buy, United Airlines, Dell and HP. Taleo Talent Exchange boasts 240 million candidates and, of the top 30 career sites, nearly half are powered by its technology.
The deal is expected to close in mid-2012 pending a go-ahead from shareholders and regulatory approval.
Tim Jennings, chief analyst at Ovum, called Oracle’s acquisition the latest move in “an aggressive and competitive wave of market consolidation in the cloud-based HCM space.” This consolidation indicates both growing enterprise acceptance of the software-as-a-service model and vendor desire to quickly command a strong position in the market.
“Both Oracle and SAP have existing on-premise HCM solutions, but both have been prepared to pay out large sums on cloud-based equivalent rather than simply transitioning their existing solutions to the cloud,” he said.
And, Jennings added, “Taleo will further advance Oracle’s public cloud strategy, joining the recently closed acquisition of RightNow for customer service management, Oracle’s Social Network for collaboration, and Oracle’s own Fusion applications.”