Message #16 From:
Stock News Bot Date: March 1, 2007 09:47:00 AM
ORCL News Fitch: Oracle's 'A/F1' Rating & Stable Outlook Unaffected by Hyperion Acquisition
NEW YORK--(BUSINESS WIRE)--Fitch believes Oracle Corporation's (Nasdaq:ORCL) (Oracle) announcement that it has agreed to buy Hyperion Solutions Corporation (Nasdaq:HYSL) (Hyperion), a global provider of performance management software solutions, via a cash tender offer for $52.00 per share, or approximately $3.3 billion ($2.9 billion net of cash acquired) will have no affect on current ratings. Oracle expects the transaction, which is subject to customary conditions, to close in April 2007.
Fitch currently rates Oracle as follows:
--Issuer Default Rating (IDR) at 'A';
--Senior unsecured debt at 'A'; and
--Commercial Paper (CP) at 'F1'.
The Rating Outlook is Stable.
Fitch believes the acquisition will be funded with current cash balances and CP borrowings. Fitch expects that stock buybacks will be moderated accordingly and short-term borrowings reduced with free cash flow over the near-term. Fitch believes the use of cash for additional acquisitions and share repurchases well in excess of annual free cash flow, which Fitch expects will exceed $4.0 billion for fiscal year 2007, or increased borrowings resulting in a net debt position would signal a shift in Oracle's financial policies and likely result in negative rating actions.
Fitch estimates Hyperion's operating EBITDA was approximately $135 million for the latest 12 months (LTM) ended Dec. 31, 2006, representing an enterprise value multiple of almost 22 times (x). While revenues over the same time frame were approximately $831 million, resulting in an operating EBITDA margin of approximately 16% versus Oracle's more than 40% margin for the LTM ended Nov. 30, 2006, Oracle is expected to improve profitability pro forma for the combination via the elimination of duplicate costs.
As of Nov. 30, 2007, cash and cash equivalents were approximately $7.8 billion in cash and cash equivalents (of which approximately $4.3 billion was held by foreign subsidiaries) and Oracle had an undrawn $3.0 billion CP program backed by a $3.0 billion revolving credit facility expiring 2011.
Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.
