Adrenaline is a dangerous drug. It can make otherwise intelligent journalists get downright giddy, throwing logic and common sense right out the window if they smell a hot story. I know—I was nearly one of them.
It happened on Thursday, when the German business weekly WirtschaftsWoche reported that SAP CEO Henning Kagermann said hed be open to a merger with bitter rival Oracle if Larry Ellison were to bring it up.
At least, thats what the Associated Press and the Boston Globe said he said to a German magazine, even going so far as to call and confirm with WirtschaftsWoche.
Me, when I tried to check out the article, courtesy of Googles English translation, I got something along the lines of “Kagermann forced to access Ellison—and feel can as secret winners. SAP brought Oracle to pay too much, says Bruce Richardson, Analyst with the US consulting house AMR Resarch. Indeed are practical 630 million dollar for an enterprise with a conversion of 174 million dollar and without profit a proud sum.”
Umm… maybe I got the wrong article when I searched?
What Kagermann said, in essence, and what started the whole feeding frenzy, is this: “I would listen to him.”
Well, of course Kagermann would listen to him if Ellison made an offer. Its called fiduciary duty.
For Kagermann to tell a business magazine that hed dump boiling oil on Ellisons head if he stepped within 100 feet of Waldorf headquarters would be irresponsible to shareholders, even if its an apt metaphor for the response Oracle would indeed receive.
“He has to listen to any offer,” said Paul Hamerman, an analyst at Forrester Research. “He has a fiduciary duty to shareholders to any offer that would come, but I dont think this type of deal is feasible.”
Why its not feasible is obvious to anybody who sat through the endless court cases as the Oracle-PeopleSoft merger took 18 months to laboriously drag through first the United States and then the European courts.
If the U.S. Department of Justice didnt like the idea of the market for enterprise applications shrinking to two players, Oracle and SAP, theyd have a baby at the idea of one huge blob of a company dominating the space. In essence, that would be four companies squashed into one: J.D. Edwards, PeopleSoft, Oracle and SAP.
Remember Craig Conway? He was the PeopleSoft head who didnt treat Oracles offer very seriously.
PeopleSofts board reacted the way any board should when confronted with a CEO who doesnt hold their fiduciary interests at heart: It showed him the door.
Kagermann is obviously a bit wiser to the ways of fiduciary duty.
Anyway, as Hamerman pointed out, Oracles too broke to afford a pricy company like SAP.
Its shelled out some $11 billion on acquisitions lately.
Microsoft, in comparison, had $50 billion on hand back when it was chatting with SAP about a potential merger.
“[Microsoft] could probably swing it, but … I think it would be challenging for Oracle to raise that kind of money at this point,” Hamerman said.
Joshua Greenbaum, an analyst with Enterprise Applications Consulting, was at an SAP board meeting just this week.
He assured me that these people are not trying to merge with Oracle.
Oracle is definitely “top of mind,” Greenbaum told me, but when youre talking about the largest enterprise applications vendors in the world, that can connote quite a different meaning than the urge to merge.
It could mean, quite simply, plain old non-merging competition.
Lisa Vaas is Ziff Davis Internets news editor in charge of operations, aka Conference Goddess. She is also the editor of eWEEK.coms Database and Business Intelligence topic center. She has been with eWEEK and eWEEK.com since 1995, most recently covering enterprise applications and database technology.
Editors Note: This story was updated to correct Craig Conways name.
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