US-based IT giant Oracle has announced it has offered to buy Melbourne, Australia-based Software-as-a-Service construction collaboration technology vendor Aconex, for Au$7.80 (Au$5.96) per share in cash, a deal valuing Aconex at approximately US$1.2 billion (c. Au$1.6bn, £0.9bn or €1.0bn).
Project cost control
The pre-internet giant has spent billions to compete in the cloud computing era – and this deal expands Oracle’s construction and engineering cloud offering. In 2007 it acquired Cimmetry, developer of the popular Autovue browser CAD viewer plugin (later rebadged as an ‘enterprise visualisation’ tool), and its project management software Primavera, acquired by Oracle in 2008, is widely used in the sector. The August 2016 acquisition of Textura’s cloud-based construction payment management (CPM) services extended the reach of Oracle’s cloud-based services. At the time, it had some 85,000 contractors – mostly in the US – in the Textura network, and over US$3.4 billion in payments processed per month, but was also expanding in Australia and pushing into Europe.
Meanwhile, Aconex was pushing into similar areas. Its July 2015 acquisition of Worksite from ARES, adding project cost management (including earned value management, budgeting, cost performance, and forecasting) to its portfolio, with Connected Cost Management (CCM) soft-launched in late 2016 and public marketing started in April 2017. Aconex’s deal to acquire Anglo-German rival Conject in March 2016 added further depth to the Melbourne business’s project cost control functionality and grew its European presence.
Meanwhile, it probably helped that several former Oracle executives were already working in Aconex. At the recent Project Controls Expo (November 2017), I interviewed Guy Barlow (recruited just over a year ago) who led the launch of CCM, and I identified it as Aconex’s potential game changer. Barlow was subsequently joined by several other Oracle colleagues. Underlining the importance of CCM, one-time Worksite executive Tim Olshansky was recently appointed CTO of Aconex.
Mike Sicilia, Oracle SVP and GM, Construction and Engineering Global Business Unit, said:
“Delivering projects on time and on budget are the highest strategic imperatives for any construction and engineering organization. With the addition of Aconex, we significantly advance our vision of offering the most comprehensive cloud-based project management solution for this $14 trillion industry.”
Aconex co-founder and CEO Leigh Jasper said:
“The Aconex and Oracle businesses are a great, natural fit and highly complementary in terms of vision, product, people and geography. As co-founders of Aconex, both Rob Phillpot and I remain committed to the business and are excited about the opportunity to advance our collective vision on a larger scale, and the benefits this combination will deliver to our customers.”
The Aconex board of directors has unanimously recommended the deal – the offer represents a 47.4% premium to Friday’s closing price of Au$5.29 – nearly four times the 2014 initial public offering price for Aconex’s shares in December 2014. The transaction is expected to close in the first half of 2018, subject to Aconex shareholder approval in March and certain regulatory approvals and other customary closing conditions. More information is available at www.oracle.com/aconex.
Update (8 February 2018) – The meeting of shareholders to approve the deal is scheduled to take place on Wednesday 14 March 2018 in Melbourne. Independent expert, Deloitte believes the deal is fair and reasonable and in the best interests of Aconex shareholders, in the absence of a superior proposal. The board continues to unanimously recommend that shareholders vote in favour.