[December 13, 2004]

Recall the Siege Engines, the Battle for PeopleSoft Is Over

by Tracey E. Schelmetic
Editorial Director, CUSTOMER INTER@CTION Solutions�

The inner walls have finally been breached, the opposition has moved into the courtyard, the war machines are quiet and the king and his court are sighing in resignation. The battle of Helm’s Deep? Only if Larry Ellison is cast as Sauron, and the PeopleSoft board is the perfidious Saruman. Eighteen months of hostility are over (at least officially).

Oracle has today revealed that it will be paying $10.3 billion (in cash) for the acquisition of PeopleSoft. This translates to $26.50 a share, a figure 11 percent above PeopleSoft’s Friday close price of $23.95 per share. Like a tourist bargaining in a bazaar, Oracle had insisted its previous offer of $24 per share, or $9.2 billion, was its best and final offer. But due to an apparently friendly meeting that took place over the weekend between the two companies, new information arose that persuaded Oracle to raise the bid to the final $26.50 per share. With Oracle in possession of 61 percent of PeopleSoft’s shares, it seems a wonder that PeopleSoft managed to hold out so long. The combined organization is now positioned to become the second-largest producer of business application software, after number-one-placed SAP.

Back in June of 2003, the original offer, you may recall, had hovered somewhere around $16 per share, a figure which would have totaled to $5.1 billion for the acquisition. The offer was rebuffed, and a famous power struggle ensued that has kept many of us in the industry quite entertained for the past year and a half.

It was a plot worthy of a soap opera: “Good” and “bad” guys maneuvering and clashing over high stakes, a struggle against oppression, huge amounts of cash, and the federal government looming above. It also had more than its share of dramatic “Hurrah!” moments. Not very long ago, the proceedings seemed surely headed for a protracted legal battle of epic proportions.

With today’s announcement, both companies have announced they “ will each stay all pending litigation and will dismiss such litigation permanently following the consummation of the offer.” (For those of us still attracted to the drama of the situation, we take titillation from the fact that many of PeopleSoft’s top executives, including CEO David Duffield, were absent from Monday morning’s public announcement. PeopleSoft’s own announcement this morning, issued separately from Oracle, was quite terse. If a press release might ever be said to be cranky, this is it. )

What we in the industry are left to wonder about is exactly what Oracle plans to do with PeopleSoft. Some critics of the deal wonder if Oracle is merely eliminating a competitor and snapping up 12,750 enterprise software customers, or whether it plans to further develop and support PeopleSoft’s top-notch software products.

We’ll keep you posted.

Tracey Schelmetic is Editorial Director for Customer Inter@ction Solutions Magazine.