Oracle vs Peoplesoft
Oracle's relentless pursuit of Peoplesoft is approaching end-game. The enterprise software maker has seen off the DoJ, it has seen off Craig Conway, the implacably hostile Peoplesoft CEO, who was fired last week; and noises coming out of the European Commission, suggest that it will wave through the bid.
Now Oracle is in a Delaware court seeking to remove poison pills put in place by Peoplesoft. One pill will pay up to $2bn in compensation to customers for disruption caused by a takeover. The other gives shareholders rights to block a takeover. It is not a foregone conclusion that Oracle will win; failure would mean that it has to start a proxy battle to get shareholders to overturn the Peoplesoft board's measures. But who can doubt that Oracle will carry on, come what may.
Of course, Oracle could always persuade Peoplesoft to capitulate, willingly. Testifying in Delaware this week, Peoplesoft director Stephen Goldby said there was a "high certainty" that a deal could go through quickly - at the right price. But what is the right price? Oracle's all-cash offer currently stands at $7.7bn. Another billion dollars? Two?
What then? Here is Bloor Research analyst Philip Howard's view on why success for Oracle would be bad for, well, just about everyone else.
Sure, it will be messy and horrid. But one has to admire the tenacity with which Oracle is bringing down its prey. Whichever way you turn, it looks all over bar the haggling for Peoplesoft. ®
Here is a round-up of some of the key events in this long, long struggle:
The Peoplesoft board has fired CEO Craig Conway, citing a loss of confidence in his ability to lead the company.
Oracle scored a stunning victory yesterday, when a federal judge ruled that its hostile bid for Peoplesoft was not anti-competitive. In a 164-page ruling, District Judge Vaughn Walker rejected the "narrow market" definition of the enterprise software market used by the DoJ and supported by most of the software industry, in its decision.
Judge Vaughan Walker heard closing arguments from the US government and from Oracle yesterday - and gave both sides some tough questions.
PeopleSoft has warned that sales for the second quarter are worse than predicted and lost no time in blaming Oracle for the fall. Shares in the enterprise software vendor fell more than 10 per cent in before-hours trading.
Larry Ellison took the stand yesterday to defend his company's proposed takeover of Peoplesoft. The Oracle CEO told the federal court in San Francisco that competitive pressures from SAP and fear of Microsoft had prompted him to bid for Peoplesoft. "We wanted to be a survivor and a consolidator, and we felt the only way to survive and prosper was through acquisition," he said, demonstrating yet again his instinctive gift for the soundbite.
Oracle will not call PeopleSoft CEO Craig Conway as a witness in the antitrust trial brought by the US Department of Justice.
Larry Ellison is in court to challenge the Department of Justice which wants to stop him taking over PeopleSoft. His defence in part relies on claims that Microsoft and IBM are likely future competitors in the enterprise software market.
Oracle will be in court later today to defend itself against claims by the Department of Justice that its proposed acquisition of PeopleSoft would damage competition. The DoJ filed an anti-trust suit in San Francisco on the basis that the merger "lessens competition in an important market."
Oracle's hostile takeover of PeopleSoft suffered another blow late last week - the European Commission has objected to the deal.
The US Department of Justice may have put end to Oracle's takeover bid for PeopleSoft, filing suit today to block the deal.
Coming hot on the heels of the announcement that PeopleSoft had agreed to acquire J.D. Edwards, Oracle's attempted hostile takeover of PeopleSoft took many by surprise, writes Fran Howarth, of Bloor Research.
Oracle has upped its hostile offer for Peoplesoft to $19.50 a share. This values its target at $6.3bn, a whopping $1.2bn higher than its opening shot and a premium of 29 per cent higher than Peoplesoft's closing share price on the day before its bid was announced.
Oracle has launched an ambush bid for Peoplesoft, just days after its target announced an agreed $1.7bn share offer for JD Edwards.