Oracle Acquires Peoplesoft

It looks like 60% of the shareholders of Peoplesoft voted to accept the $24/share offer from Oracle. That means a major application vendor will get eaten by the database engine and services giant.

Having been an Oracle competitor in the past (first with Informix, then with IBM's DB2) I appreciate why Peoplesoft's management didn't like the idea. Oracle did not treat independent software vendors very well. Often they would try to sell database engines to the ISVs and their customers at the same time they would compete against those same ISVs with their own products. I may be biased, but IBM seems to handle this kind of situation better.

Now it is time to see what sort of “poison pill” measures Peoplesoft management may have had in place in order to gild their parachutes (from the Wall Street Journal:

PeopleSoft's board also has refused to dissolve the company's poison pill defense, an antibuyout mechanism that can be triggered when Oracle purchases 20% or more of PeopleSoft stock. The pill would issue new shares to existing investors, making a takeover prohibitively expensive.

There is also a large measure of merger and acquisition fever amongst the customers:

In a survey conducted last week, AMR Research found many PeopleSoft customers have reservations about a merger. AMR Vice President Bill Swanton said 150 customers were contacted, the majority of which used J.D. Edwards products.
Sixty-three percent said they would stop paying maintenance fees to Oracle either immediately or if Oracle stops enhancing their products, provided they could find maintenance from a third party. Forty-seven percent said they expected Oracle to add no new features to their software, suggesting an unease with the merger.

This one will continue to be interesting to watch.

Josh Poulson

Posted Saturday, Nov 20 2004 08:21 AM

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