(Reuters) - Oracle Corp ORCL.O said it will buy web-based recruitment software maker Taleo Corp TLEO.O for about $1.9 billion to expand its line of cloud computing products, one of fastest growing areas of the technology market.
The move will allow Oracle to better compete with rivals including SAP AG, which said in December it would buy cloud human-resources software maker SuccessFactors Inc for $3.4 billion to jump start its expansion into cloud computing.
The Taleo deal value of $46 a share offers an 18 percent premium to Taleo’s Wednesday close of $38.94.
Taleo shares surged 17 percent on Thursday and other makers of cloud-based software rose on hopes they might be the next to be sold in what could be a cloud-computing acquisition spree by big technology players.
Last year, Oracle and SAP started buying up companies to expand in cloud computing - the business of providing software, storage, computing power and other services to customers via remote data centers over the web.
They are trying to catch up with industry leader Salesforce.com Inc (CRM.N), which Oracle Chief Executive Larry Ellison helped launch over a decade ago, though he was eventually ousted from the company’s board.
Morgan Keegan analyst Michael Nemeroff said that Oracle’s purchase of Taleo fills a hole in its recently launched portfolio of cloud-based business management software, which is known as Fusion Apps.
“They did not have a recruitment package. They always needed to develop or buy it and now they have done it,” he said.
Last month, Oracle filled another hole with its $1.5 billion purchase of RightNow Technologies: web-based software for handling customer service.
Nemeroff does not expect Oracle to do many more deals in the cloud market because its portfolio is now pretty much complete, with one exception. It could use a payroll package such as one sold by Ultimate Software Group Inc (ULTI.O).
He said SAP is likely to be more aggressive in the space since its cloud-based offering is not as deep as Oracle‘s.
Shares of several rivals also rose in pre-market trading. Cornerstone OnDemand Inc’s (CSOD.O) stock was trading up 3 percent at $18.30 on Nasdaq. Kenexa Corp KNXA.O climbed 4 percent to $29.36, while Ultimate Software Group rose 1 percent to $66.90.
Oracle expects the transaction to close in the middle of this year.
Reporting by Jim Finkle in Boston and Sayantani Ghosh in Bangalore; Editing by Joyjeet Das and Derek Caney