oracle's acquisition of peoplesoft
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Oracle's Acquisition of Peoplesoft
Presented By:Aditya MeenaManish Shrivastava
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Overview of oracle• Founded in 1977 • Founded by Larry Ellison• More than 55,000 Employees• Services provided include:
• Database Software • Security• Data Warehousing • Enterprise Management Software• Consulting• RFID’s, Radio Frequency Identification
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Overview of Peoplesoft
• Founded in 1987• Founded by Dave Duffield & Ken Morris• Primary Focus on ERP Software
• One Week before the start of the Oracle hostile take over PeopleSoft offered a bid to take over J.D. Edwards for $1.7 billion, which would have made PeopleSoft the second largest ERP software company
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Oracle’s Need of Acquisition•To begin Oracle was in a database market with stiff competition and profit margins becoming slim and markets becoming stale
• Oracle needed to expand into a newer market which would help it regain their success
•ERP, Enterprise Resource Planning, was seen as one of the waves of the future and an attractive market to enter
• To pursue ERP software there were two options; development or acquisition
• Oracle chose to acquire a company and found only two options; PeopleSoft and SAP
• A restructuring led to an attempt at an ERP induced takeover with PeopleSoft rather than SAP due to the total cost and feasibility
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Enterprise Resource Planning (ERP)
•Management Information Systems that integrate all or part of a business’s operations or production/service•“Back office” systems•Best practices and re-engineering process•Very expensive to implement•“Productivity Paradox” applies
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PeopleSoft’s Reaction
•Buys JD Edwards - Friendly merger•$1.7B•Becomes bigger and more expensive to acquire
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PeopleSoft’s Reaction Cont’dPoison pill
1. Reduced support = 2 to 5 times fees for purchase
2. Stock trick = dilute stock to take away ownership
3. Power shift towards directors rather then shareholders
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Oracle’s Reaction
•Insists and raises bid - Hostile takeover•Original bid $16/share•June 03- 2 weeks later $19.50/share•Feb 04- Raise 33% to 9.4B or $26/share
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DOJ Gets Involved
•Feb 2004 Department of Justice: Anti-trust•SAP and Microsoft•Involvement? Sat back and watched•Denied because software companies that make ERP
software for "mid-market" customers also compete for those same "large complex enterprises."