Oracle to acquire Aconex for US$1.2 billion

Dec 18, 2017 | Hot Topics

Oracle and Aconex announced overnight that the ERP supplier is buying the cloud-based construction management and collaboration software maker for a total of US$1.2 billion (AUS$1.56 billion) in cash. Aconex reported revenue of $161 million in FY17; that makes the purchase price a 9.7 revenue multiple. Oracle’s interest in the construction industry started in 2008, with the acquisition of Primavera, continued with the 2016 addition of contract and payment management platform Textura and now, Aconex.

Aconex is an Australian company that isn’t as well know in the US and Europe as it would like — so, clearly, one reason for the deal is to use Oracle’s reach to expand Aconex’ market presence. According to Oracle’s materials, Aconex’ construction management software has 5.5 million project users, who managed over $1 trillion in projects. Even though it’s quite small, it has an impressive customer roster that has bought into Aconex’ goal of being the premier platform for digital project delivery. But as a small firm, it had limited R&D dollars to invest; Aconex’ CEO Leigh Jasper told investors that “Oracle’s continued investment in Aconex will deliver more functionality and capabilities at a quicker pace, as well as provide better integration and alignment with Oracle’s other product offerings.”

Oracle says Aconex will become part of its construction and engineering business unit, where it will complement Textura and other cloud-based software that focuses on project planning, management and payments. The acquisition is expected to close in the first half of 2018. Aconex said that its directors unanimously recommend accepting the offer, with shareholders scheduled to vote at a meeting in March.

This deal makes a lot of sense, given that Oracle can now bring even more products to its huge Primavera installed base. Construction projects usually have a lot of participants, some of whom are in it for the entire duration but others who come in as their skills are needed. Add in building codes, suppliers, regulators, community stakeholders — and schedules, paper, digital, video, images. Using legacy systems to connect and manage all of these people and types of information is difficult and expensive. Earlier and better collaboration leads to more efficient projects; these benefits can flow to all who are involved, not just the asset owner and principle contractor. Aconex and Oracle intend to bring more 21st century technology to an industry in serious need of modernization.