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Oracle Offer Aftermath
PeopleSoft's board of directors unanimously decided that the offer to buy PeopleSoft's outstanding shares of stock for $16 per share would be met with lengthy antitrust scrutiny.
Posted Jun 12, 2003
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Responding to Oracle's hostile bid for PeopleSoft for $5.1 billion last week, PeopleSoft today released a statement, advising stockholders to reject the offer. PeopleSoft's board of directors unanimously decided that the offer to buy PeopleSoft's outstanding shares of stock for $16 per share would be met with lengthy antitrust scrutiny and suggests there is a significant likelihood the approval would not be granted, the release stated. "The Board believes that the delays and uncertainties created by Oracle's offer, coupled with Oracle's stated intent to discontinue PeopleSoft's market-leading products, represent a substantial threat to stockholder value. The unsolicited and hostile nature of the offer, combined with Oracle's statements, is designed to disrupt the Company's strong momentum at significant cost to PeopleSoft's customers," the statement said. "Oracle's offer seeks to enrich Oracle at the expense of PeopleSoft's stockholders, customers and employees," said Craig Conway, PeopleSoft's president and CEO in the statement. "We believe that Oracle's proposed acquisition of PeopleSoft would stifle competition and limit customer choice. PeopleSoft remains steadfastly focused on providing our customers with superior products and services, and we will not let Oracle's tactics interfere with our business." Conway has already publicly stated that Oracle's offer is an attempt to derail PeopleSoft's acquisition of J.D. Edwards for $1.7 billion. To further persuade shareholders PeopleSoft will host a conference call Thursday at 1:00 p.m. PDT (4:00 p.m. EDT) to discuss the board of directors' recommendation. A live audio-only Webcast of the call will be made available in the Investor Relations section of the company's Web site at www.peoplesoft.com. If PeopleSoft cannot convince shareholders to reject Oracle's offer, the combined company, analysts say, would then pose a threat to Siebel Systems. A report released yesterday from TheInfoPro, a newly formed research firm in New York, states that out of 101 CRM professionals queried almost twice as many are planning to implement either Oracle or PeopleSoft CRM software over Siebel. "The union of Oracle and PeopleSoft could pose a threat to Siebel, because 60 percent of users say that greater integration of CRM with their ERP systems is 'very important,'" the report stated.
Oracle and PeopleSoft's combined customer base represents only 13 percent of the 101 CRM professionals queried, whereas Siebel customers represent 37 percent of respondents. Yet, that may change over time. "Siebel is not vulnerable to the combination of Oracle and PeopleSoft now, but it will be in two years," reports David Taylor, PhD, chief research officer of TIP, who designed the study. Some analysts, such as Sheryl Kingstone, CRM program manager at Yankee Group, go so far as to say the acquisition could eliminate Siebel and make the CRM enterprise market a two-horse race between Oracle and SAP AG. Exactly how much it will affect Siebel is uncertain, but Chris Selland, managing director and founder of Reservoir Partners, maintains, "Siebel is too big to disappear." He suggests, however, that Siebel could become a takeover target.
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