In his 44 years working Oracle, Larry Ellison has by no means spent this type of cash. Not even shut.

Oracle’s announcement on Monday that it is shopping for medical software program vendor Cerner for $28.3 billion is monumental for an organization that was as soon as considered because the software program trade’s nice consolidator.

On 15 events since 2005, Oracle has shelled out not less than $1 billion for an acquisition. Seven of these topped $5 billion. In 2009, Oracle agreed to pay $7.4 billion for Solar Microsystems, opening its pockets for servers and storage networks to transcend software program and turn into what Ellison referred to as an “built-in system” firm.

However solely as soon as, previous to this week, has Ellison ever spearheaded a deal of not less than $10 billion. That got here in 2004, when Oracle purchased PeopleSoft for $10.3 billion after a hostile battle that lasted 18 months.

In agreeing to purchase Cerner for nearly 3 times the worth of PeopleSoft, Oracle is leaping into the trendy period of M&A, one which lately appeared to move Ellison by. Rivals have used their increasing market cap and swelling money piles to purchase progress or to get right into a market that may maintain them related because the world goes cloud, cell, and pushed by knowledge.

It is the primary mega-deal for Oracle for the reason that $9.3 billion buy of cloud enterprise administration software program vendor NetSuite in 2016. Ellison, Oracle’s chairman, was NetSuite’s greatest shareholder, with possession of roughly 40% of the corporate on the time of the deal.

“Ought to this deal be consummated, it might mark a return to Oracle’s days of aggressive acquisition exercise throughout which period the corporate very successfully rolled-up the legacy client-server utility house,” wrote analysts at Stifel, in a report late final week after information of a probable deal was reported. “What’s completely different this time is that the sector is within the midst of robust secular progress pushed by an architectural shift to the cloud.”

This yr alone, Salesforce closed its $27.1 billion buy of Slack, and Sq. introduced plans to purchase Australian fintech firm Afterpay for $29 billion. Microsoft stated it is shopping for speech recognition software program supplier Nuance Communications for $16 billion, and Zoom agreed to purchase contact middle software program firm Five9 for $14.7 billion in inventory. That deal was rejected by Five9 shareholders after a slide in Zoom’s inventory worth made a mixture unattractive.

Oracle’s buy of Cerner, assuming it will get accredited by regulators and Cerner stockholders, might be up there with the most important software program offers ever. The largest got here in 2019, when IBM closed its $34 billion buy of Purple Hat.

Cerner, which was based in 1979, two years after Ellison created Oracle, is the second-largest supplier of digital medical information expertise, behind Epic. Hospitals and medical services use the software program in order that medical doctors and staffers can share imaging knowledge, affected person experiences and prescriptions in a safe method.

Oracle shares fell 5% after the deal was introduced on Monday. At $95 a share, the acquisition worth quantities to a 20% premium over Cerner’s closing worth on Thursday, previous to information experiences that the businesses had been in late-stage talks.

Regardless of Monday’s slide, the transaction comes amid revived Wall Avenue optimism in direction of Oracle. On Dec. 10, after a better-than-expected earnings report, Oracle’s inventory shot up 16%, it second-best day in twenty years. The shares are up 42% this yr, double the good points within the S&P 500, and so they reached a document final week.

However Oracle is paying money for Cerner, moderately than making the most of its inventory appreciation. That is a hefty load for an organization that reported $23 billion in money and marketable securities on the finish of the most recent quarter, and sometimes generates about $12 billion a yr in free money movement. Oracle did not say something about how it might finance the $28.3 billion deal.

An individual near the matter stated Oracle will not have to boost debt, contemplating the prevailing money steadiness plus more money that might be generated by the point the deal closes. The individual requested to not be named as a result of the main points are confidential.

Ellison could also be going massive, however he is staying far-off from the form of offers being pursued by Salesforce’s Marc Benioff, who received his begin working beneath Ellison at Oracle. Salesforce has spent virtually $50 billion mixed on Slack, Tableau and MuleSoft up to now three-plus years, prioritizing progress and new market alternatives over revenue, not less than within the close to time period.

Cerner, like Oracle, is a slow-growth enterprise that throws off money, the other of most trendy subscription software program companies. Annual progress hasn’t attain double figures since 2015, and gross sales shrank by 3.3% in 2020. Income is on tempo to extend by about 5% in 2021 to an estimated $5.8 billion.

Nevertheless, Cerner is anticipated to generate virtually $1 billion in web earnings this yr. Oracle CEO Safra Catz stated within the press launch that the acquisition might be “instantly accretive to” non-GAAP earnings within the first full yr after closing “and contribute considerably extra to earnings within the second fiscal yr and thereafter.”

One side of Cerner’s enterprise that is more likely to be of explicit curiosity to Ellison is the corporate’s transfer to Amazon Internet Providers. In 2019, Cerner introduced an initiative code-named “Venture Apollo” that might run on AWS infrastructure and permit shoppers to entry cloud applied sciences.

Oracle was a late entrant to the cloud infrastructure enterprise, and it trails AWS, Microsoft and Google by way of market share. Removed from conceding defeat, Ellison makes use of each alternative to tout Oracle’s cloud capabilities, sometimes on the expense of AWS.

There’s each cause to imagine that Ellison sees Oracle’s cloud because the eventual house for a superb chunk of Cerner’s future migration.

The phrase “cloud” exhibits up 11 instances within the deal press launch, together with in a quote from Oracle Government Vice President Mike Sicilia, who stated Oracle’s expertise “allows us to quickly modernize Cerner’s methods” within the transfer to the cloud.

Elsewhere within the launch, Oracle says “Cerner methods working on the Oracle Gen2 Cloud might be obtainable 24 by 7 by 365,” and the “objective is to ship zero unplanned downtime within the medical surroundings.”

WATCH: Oracle in talks to purchase Cerner