Ordinary Gweilo

This development in Oracle’s battle with PeopleSoft took me rather by surprise. Last year, Peoplesoft agreed to merge with (take over) J D Edwards, and Oracle then launched a hostile bid that seemed to be designed to frustrate this merger. Peoplesoft and JDE managed to re-structure their merger so that it could be completed more quickly and Oracle couldn’t block it.

Then, rather surprisingly, Oracle raised its bid for Peoplesoft and said that they were still interested in the merged business. However, the offer was still low, and it was also referred to the US Department of Justice for their consideration. It therefore seemed likely to lapse, especially after Peoplesoft and JDE completed their merger.

Now, however, Oracle has come back with an increased offer that finally seems attractive enough for Peoplesoft’s shareholders to give it serious consideration – if the DOJ and the EU authorities don’t block the deal.

The board of Peoplesoft may still try to reject Oracle’s advances, but their shareholders could well see things differently. At the time of the original bid, Craig Conway, PeopleSoft’s chief executive, said that there were “no terms” on which he would do a deal with Oracle, which is understandable given his history with Larry Ellison but not something that a CEO of a public company should say. All public companies are owned by the shareholders, and all are theoretically for sale if the price is right. The management may not like it, and the employees may not like it, but it is up to the owners (i.e. the shareholders) to make the decision.

So what is happening here? Did Ellison really want to buy Peoplesoft all along, and if so then why did he pitch his offer so low? Is he doing this to get rid of a powerful competitor, or does Peoplesoft represent an opportunity for Oracle to grow its business? Or does Ellison expect the bid to be blocked by the DOJ next month and wants to cause more discomfort to Peoplesoft whilst he still has the chance?