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Transaction
Case Studies

Peter A. Sokoloff & Co. regularly analyzes transactions which occur within the industries covered. An archive of these case studies is kept online as a courtesy to our colleagues. To receive by e-mail new case studies as they are prepared, please e-mail bwalko@sokoloffco.com with your contact information.

Archives > Transaction Case Study #12

Oracle acquiring Portal Software, Inc.

Dear Colleague, 

On April 12th, Oracle (NASDAQ:ORCL) announced it will be acquiring Portal Software, Inc. (OTC BB: PRSF.PK) through a cash tender offer for $4.90 per share, or approximately $220 million.  By April 20th the market had reacted by driving PRSF's price above the tender, to $5.05.  The transaction is expected to close in June 2006, subject to regulatory and other approvals. 

Not uncommon when a corporate heavyweight like Oracle and its hard driving CEO Larry Ellison roll the dice, speculators are jumping in, betting that Mr. Ellison will raise his tender in order to complete this strategic transaction. 

Oracle, the world’s largest enterprise software company with revenues of $13.4 billion (ttm), supplies technology and applications to over 90% of communications companies worldwide. Since the transaction was announced, Oracle’s price per share has gone from $13.84 to $14.15 (at close on April 20) for a 2.2% increase or over $1.6 billion in market cap.  

Portal is a global provider of billing and revenue management solutions for the communications and media industry with object-oriented architecture built on Oracle that can bill and manage all communications services including wireline, wireless, broadband, cable, voice over IP, IPTV, music, and video. 

One time high flyer Portal Software had as much as a $12 billion market cap during the heights of the Internet Bubble in 1999.  At the current tender price, the company has an enterprise value of about $177 million.  This is equal to 1.56x trailing twelve month (ttm) revenue of $113.5 million.  In 1999, PRSF traded at 127x ttm revenue!  The company continues to lose money, so no P/E or multiple of EBITDA is applicable. 

Portal's management and employees will form a dedicated global communications business unit within Oracle concentrating on billing and revenue management.  Bhaskar Gorti, Portal’s current SVP of worldwide sales, services and marketing, will lead the unit as General Manager, and current PRSF CEO Dave Labuda will become the unit’s CTO. 

"This is exactly the kind of combination our customers have been asking for," said Labuda, who was one of the founders of Portal.  

"The combination of Oracle and Portal delivers the first end-to-end packaged enterprise software suite for the communications industry," said Oracle's President Charles Phillips. 

We hope that you find this feature from Sokoloff & Co. interesting, informative and useful.  We welcome your comments and suggestions.  

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