Hostile Buyouts Price
It is ironic that if Oracle and PeopleSoft had agreed to the amicable merger they discussed in mid-2002, the Department of Justices antitrust division might very well have given its blessing to the match. Today, DOJ officials reject this theory. They say that with the enterprise applications software market dominated by just three players, the friendly merger of PeopleSoft and Oracle would have been as illegally anticompetitive as Oracles hostile bid in June 2003. The market facts and legal logic would have been the same, and the government would have acted to block the buyout. Click here to read about Oracle CEO Larry Ellisons testimony that talks on a friendly merger failed because of PeopleSoft Craig Conways demand that he remain in charge of the PeopleSoft product line. But there is one key variable in this scenario. In June 2003, PeopleSoft was already in the midst of an amicable buyout of enterprise resource planning rival J.D. Edwards. Oracle was making a bid to acquire two companies for the price of one. Its one thing for two companies to merge without antitrust objections. Its quite another for three to merge into one.PeopleSoft was convinced that it needed to form an alliance to ensure that its technology would remain a force in the market for the long term. When it couldnt get the kind of deal it wanted from Oracle, it turned to J.D. Edwards to make a deal that would make PeopleSoft the senior partner. PeopleSoft would gain a broader products portfolio and a deeper customer base while retaining control of is own product line and corporate identity. Now, PeopleSofts future is in Judge Walkers hands. He almost certainly wishes it wasnt. Check out eWEEK.coms Enterprise Applications Center at http://enterpriseapps.eweek.com for the latest news, reviews and analysis about productivity and business solutions.
Hostile takeovers have been relatively rare in the IT industry. Companies that are facing increasing market pressure, are losing market share or that dont have the technology portfolio to keep pace with competitors will cast about for a friendly merger on favorable terms.