Oracle's Acquisition of Peoplesoft
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Case Details:
Case Code : BSTR154
Case Length : 19
Pages Period : 2000-2005
Organization : ORACLE
Pub Date : 2005
Teaching Note :Not Available
Countries : United States
Industry : Software
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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.
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EXCERPTS
The Tender Offer
On June 06, 2003, Oracle announced its bid to acquire PeopleSoft for $16 per
share or approximately $5.1 billion in cash. The offer was made just four days
after PeopleSoft had announced its decision to buy JD Edwards for $1.7 billion
in stock.
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On June 12, PeopleSoft rejected Oracle's offer. It filed a suit in a Californian
state court, accusing Oracle of damaging its business and sought $1 billion in
damages. It also charged Oracle with disrupting its ongoing acquisition of JD
Edwards. PeopleSoft attributed Oracle's move to the fact that it had been
continuously registering market share gains against Oracle in the previous
couple of years. On June 18, Oracle raised its bid to $19.50 per share or about
$6.2 billion. Two days later, PeopleSoft again rejected the offer. On June 30,
the US DOJ began investigations into the Oracle offer. Meanwhile, on July 18,
PeopleSoft completed its acquisition of JD Edwards. Oracle later increased the
acquisition bid to about $7.5 billion...
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The Rationale
In the late 1990s, the technology boom led to the rapid growth of the global
software industry, which witnessed a mushrooming of numerous specialized
business-software developers. With the industry facing a recession in the early
2000s, there were too many software vendors but not enough paying customers...
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The Antitrust Trials
On June 30, 2003, the DOJ started its investigations
into Oracle's acquisition bid. It filed a suit on February 26, 2004, to
challenge the proposed merger pursuant to Section 7 of the Clayton Act .
The trial began in June 2004. From the DOJ's viewpoint, Oracle's bid was
an attempt to eliminate its major competitor. The DOJ expressed concern
that Oracle could raise prices of its software while spending less money
on product improvements. Oracle, on its part, supported its bid as an
important measure to compete with archrivals -Microsoft and IBM... |
Excerpts Cond... >>
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