Hostile Takeover: Oracle, the second

Hostile Takeover:

Oracle, the second largest software maker , has launched a hostile takeover attack on PeopleSoft. The bid would roughly cost $5.1 billion for Oracle. Oracle is offering $16 cash per share for each share of PeopleSoft, a roughly 6 percent premium over PeopleSoft’s closing price last Thursday of $15.11. Larry Ellison, CEO of Oracle, made clear in a press meet that Oracle has no intention of keeping PeopleSoft alive as a separate brand, after the buy out.

On the other hand, PeopleSoft has made a deal to takeover its rival ERP software company, J.D. Edwards for $1.7 billion. The proposed combination of Peoplesoft and J.D. Edwards could increase competitive pressures on Oracle and ERP software market leader SAP.

Hostile bids in this IT business are unusal but not unheard of. Some eight years ago, IBM launched a hostile offer for Lotus Development that resulted in a $3.5 billion acquisition of the software maker.

So as things advance, it looks like, should the deal go through, PeopleSoft would takeover J.D.Edwards and PeopleSoft inturn takenover by Oracle. This combination of the Oracle + PeopleSoft + J.D.Edwards would result with an annual revenue of $2.8 billion for Oracle. Currently Oracle is just marginally ahead of PeopleSoft in marketshare by revenue. It has 13% of marketshare while PeopleSoft has 10% and J.D.Edwards is at 4%.

Being a PeopleSoft proffesional, I personally feel this would affect a lot of PeopleSoft professionals around the world and also the PeopleSoft customers. Even now, many of my onsite counterparts are skeptical and worried about the future of PeopleSoft. But some are sure this would be an anti-trust case against Oracle.

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