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May 4, 2016

Oracle Extends Buying Spree With Opower Deal

Oracle extended its reach into the industrial and analytics sectors this week with the acquisition of Opower, an energy analytics company and provider of cloud services to utilities in a deal worth about $532 million.

Oracle (NYSE: ORCL) said it would pay $10.30 per share in cash for Opower (NYSE: OPWR), which is based in Arlington, Va. The acquisition is expected to close later this year. Oracle said the transaction is subject to some regulatory approvals.

Opower’s big data platform stores and analyzes more than 600 billion meter readings from over 100 utilities that include Pacific Gas and Electric (NYSE: PCG), Exelon Corp. (NYSE: EXC) and National Grid (NYSE:NGG). Exelon recently completed a controversial merger with the Maryland and Washington, DC, utility Pepco.

Among other things, the Opower platform helps utilities meet regulatory requirements such as state-by-state energy efficiency standards.

Oracle said the deal would help it address the growing need among utilities to meet operational and compliance requirements. The combined companies “will be the largest provider of mission-critical cloud services to utilities,” according to Rodger Smith, general manager of Oracle’s Utilities Global Business Unit.

Opower CEO Dan Yates added that the merger would beef up its cloud platform for delivering applications “from meter to grid to end-customers.”

Oracle Utilities currently offers a suite of operational applications and cloud services for electric, gas and water utilities that automate core process and ensure regulatory compliance. The partners estimate the global utility market that is gradually shifting to cloud services is worth an estimated $2.3 trillion.

Opower was founded in 2007 and went public in 2014. It reported a $45 million operating loss last year with annual revenue totaling $145.7 million. According to reports, Opower recently laid off 7.5 percent of its workforce.

The Opower deal is the latest in series of analytics and cloud services acquisitions by Oracle. In January, the database giant acquired AddThis. The web analytics vendor will become part of Oracle’s data-as-a-service platform called Data Cloud that hosts its data ID Graph, a marketing tool used to track consumer behavior across social and other media channels.

In February, Oracle reportedly paid $500 million to acquire startup Ravello Systems of Palo Alto, Calif., a pioneer in a cloud service called “nested virtualization” that allows enterprises to run VMware and kernel-based virtual machine (KVM) workloads on different public cloud without modification. KVM is the virtualization infrastructure for the Linux kernel that turns it into a hypervisor.

The Ravello deal has since closed, and its entire team joined Oracle’s Public Cloud unit to focus on its infrastructure-as-a-service offering that allows users to run analytics and other workloads in the cloud.

Last fall, Oracle rolled out a new cloud-based data visualization service as it and other analytics vendors seek to drive data science deeper into organizations.

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