Oracle's Acquisition of Peoplesoft

Oracle's Acquisition of Peoplesoft

Presented By:Aditya MeenaManish Shrivastava

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

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

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

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

PeopleSoft’s Reaction

•Buys JD Edwards - Friendly merger•$1.7B•Becomes bigger and more expensive to acquire

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

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

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."