Ellison: PeopleSoft CEO Blew Merger Deal

By John Pallatto  |  Posted 2004-06-30 Print this article Print

UPDATED: A year before Oracle made its bid for PeopleSoft, the two companies were deep in discussions over a possible merger, says Oracle CEO Larry Ellison at the DOJ antitrust trial, blaming PeopleSoft's Conway

SAN FRANCISCO—At the ongoing antitrust trial here, Oracle Corp. CEO Larry Ellison testified on Wednesday that merger discussions Oracle and PeopleSoft Inc. conducted in mid-2002 failed mainly because PeopleSoft chief executive Craig Conway insisted he would remain the sole head of the merged business applications group. Conway called Ellison in June 2002 to discuss a possible merger more than a year before Oracle made its buyout bid for PeopleSoft. Before a packed courtroom here in the U.S. 9th District Court, Ellison said Conway proposed the merger discussions as the best way for PeopleSoft and Oracle to fend off competitive pressures from SAP AG as the dominant player in the business applications market.
"We thought we would be better able to compete if we joined forces," he said, adding that that at the time Ellison thought it was an "interesting idea."
Conway recently unloaded on SAP CEO Henning Kagermann at the companys Sapphire user group conference in New Orleans. Click here to read more. Ellison said he told Conway that he needed more time to think about the deal. He then initiated discussions, which included Oracle President Safra Catz. The two companies subsequently held high-level talks on how to carry out a merger. Following these meetings, Ellison was convinced even more that this would be the "smart thing we could do to improve our business position," he said. However, he could not accept Conways demand that the PeopleSoft executive run the applications group because Oracle would be the majority owner of the merged companies. Once these talks failed, it wasnt until the day that PeopleSoft announced its planned merger with J.D. Edwards that Oracle decided the time was right to make its tender offer. Oracles legal team announced on Monday that it would not call Conway, who had been subpoenaed to appear on Tuesday. Before the trial started, Oracle attorneys predicted they would grill Conway for six hours, press reports said. Next Page: Damage done to PeopleSofts public image?

John Pallatto John Pallatto is eWEEK.com's Managing Editor News/West Coast. He directs eWEEK's news coverage in Silicon Valley and throughout the West Coast region. He has more than 35 years of experience as a professional journalist, which began as a report with the Hartford Courant daily newspaper in Connecticut. He was also a member of the founding staff of PC Week in March 1984. Pallatto was PC Week's West Coast bureau chief, a senior editor at Ziff Davis' Internet Computing magazine and the West Coast bureau chief at Internet World magazine.

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