The plot thickened Monday in the enterprise software industrys high-stakes acquisition drama as Oracle Corp. sought to remove one of the barriers to its proposed $5 billion hostile takeover of enterprise software maker PeopleSoft Inc. At the same time J.D. Edwards & Co. Chief Executive Bob Dutkowsky called on PeopleSoft investors to shun Oracle in favor of a $1.7 billion acquisition of his company.
Oracle CEO Larry Ellison early Monday afternoon sent a letter urging PeopleSoft CEO Craig Conway to remove the “poison pill” that would likely derail any hostile takeover of the company.
Also on Monday, at Denver-based J.D. Edwards Quest Global User Conference in Denver today Dutkowsky made a pitch for PeopleSofts acquisition of his company saying it was better for PeopleSoft customers and investors.
“I believe an Oracle acquisition of PeopleSoft raises such serious anti-trust problems that it will result in months of investigation by the” U.S. Department of Justice and the European Unions antitrust investigators.
“I believe one or both agencies will block the deal,” he said. “Oracles offer would remove one of the major competitors in this industry.”
Dutkowsky also chided Oracle for the apparent speed with which it decided on making its bid for PeopleSoft.
“We did eight months of research [on the proposed PeopleSoft-J.D. Edwards deal] and both boards thought it would be good,” he said. “This was not done in a half-cocked way, but in a well-thought-out, well-planned way.”
Dutkowsky replayed the benefits of a merger of his company and PeopleSoft that he and Conway trumpeted last week: complementary product lines and complementary market segments along with compatible corporate cultures.
“It is obvious that J.D. Edwards and PeopleSoft can do more together than we could as separate companies,” he said.
Dutkowsky chided Oracle for saying it will force PeopleSoft users to adopt Oracle Applications, saying that even if Oracle gave away its software the customers would pay more in the end.
“In the world of enterprise software free is not free,” he said. “The cost of software is only one-fifth the cost of enterprise applications. There is the cost of implementations, build out, customization, training of thousands of users. When you add that up free is not free.
“Weve had competitions where Oracles final bid was free and we have won [the contract.]”
When asked why J.D. Edwards approached only PeopleSoft about buying the company and not Oracle, Dutkowsky said that J.D. Edwards and Oracle had more product overlap and many J.D. Edwards customers, like PeopleSoft customers, used IBMs enterprise database and would be forced to move to Oracles database. Dutkowsky would not say if his company had talked with officials at IBM about a possible deal with PeopleSoft before it was announced.
Dutkowsky acknowledged that Oracles takeover bid had cast a shadow that could cause some potential customers to hold off buy software from his company or PeopleSoft. But he said that those customers would pay a penalty in competition against their competitors by not keeping up in the IT arms race.
“For every freeze [on J.D. Edwards purchases] there will be one deal that goes ahead,” he said, citing a large transaction that closed last week.
If Oracle is successful in buying PeopleSoft, J.D. Edwards has a backup plan, Dutkowsky said. He declined to say what that plan entailed but he did take a parting shot at Oracle.
“If a customer doesnt like the way it is treated [by Oracle] they have alternatives,” Dutkowsky said. “We remain a viable alternative.”