Analysis of the hostile takeover of PeopleSoft by Oracle.

1. Oracle & PeopleSoft
Paulo Arantes Junqueira, Linde Cook | April 23, 2015

2. Objectives
 Analyze the acquisition of PeopleSoft by Oracle.
 Assess the results of the process.
Introduction
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Structure

3. Background
Information

4. Industry: Information Technology
Sub-industry: Business software
Type of acquisition: Horizontal and hostile
Main players: Microsoft, SAP AG, IBM, Oracle and PeopleSoft.
Background Information
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5. Background Information
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Revenue: $ 10.2 bi in 2003
Employees: 41,000
Main business: Flagship database
systems
Culture: based on “the ruthless,
take-no-prisoners attitude of Larry
Ellison”
Revenue: < $ 3 bi in 2003
Employees: 11,600
Main business: Application Softwares
(financial, human-resources)
Culture: ‘PeoplePeople’ friendly
corporate culture, caring of customers
and partners.

6. The Acquisition
Saga

7.  June 2, 2003: PeopleSoft announces the acquisition of J.D.
Edwards.
 June 6, 2003: Oracle makes a hostile tender offer on PeopleSoft of
$5.1 bi (9% premium).
 June 12, 2003: PeopleSoft board rejected the offer.
 June 18, 2003: Offer increased to $6.3 bi or $19/share (12.5%
premium). Deadline on July 18.
 PeopleSoft decided to cite antitrust concerns.
 Microsoft and SAP have considered merging.
The Acquisition Saga
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8.  August, 2003: While waiting for the decision, PeopleSoft attempted a
Poison Pill defense, (‘flip-in’ - 18%) to allow shareholders more voting
power against Oracle.
 Due to the uncertainties, PeopleSoft was losing clients to SAP (Safe
Passage Program).
The Acquisition Saga
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9. "It's consistent with what PeopleSoft's board has said all along: that
Oracle's offer undervalues the company and involves unacceptable risks
for stockholders.”
Steve Swasey, Director of Corporate Relations
Accusations between Craig Conway and Larry Ellison
February 26, 2004: DOJ decided it would challenge the transaction.
Oracle hired Jim Rill, former Head of Antitrust Division of DOJ, Jim
Miller, former Chairman of the FTC and former Senator Tim
Hutchinson to start a fight with the DOJ. “Oracle against the USA”
The Acquisition Saga
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10.  European Commission was also reviewing the case but Oracle was
able to stop the investigation in order to gather more information.
 Oracle had a favorable decision over the DOJ, with Elzinga, member of
the DOJ, defining the geographic market as international.
The Acquisition Saga
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11.  PeopleSoft’s BOD rejects five offers from Oracle.
 November, 2004: Oracle offers “best and final offer” $24/share that
61% of shareholders supported. BOD still declined.
 December, 2004: Oracle offers $26.50/share. PeopleSoft’s BOD
votes for the sale on Sunday, December 12.
“This is a sad day for me and, I’m sure, an equally sad day for you. To
those who will lose their jobs, I offer my sincere apologies for not
figuring out a different conclusion to our 18-months saga.”
David Duffield, PeopleSoft’s CEO and founder
The Acquisition Saga
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12.  Oracle purchased 97% of outstanding common stock at $26.50/share
in cash on January 6, 2005
The Acquisition Saga
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Component Value ($ bil)
Goodwill 6.253
Intangible Assets 3.384
Tangible Assets 1.410
R&D Expense 0.033
Total Purchase
Price
11.08

13.  All court cases, including Oracle’s suit to remove PeopleSoft’s poison
pill defense are dismissed.
 Oracle now seen as a significant competitor with SAP.
 Oracle avoids $2 billion in guarantees to PeopleSoft customers.
The Acqusition Saga
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14. Assessing the
Results

15.  Both Oracle and PeopleSoft share prices rose by 10% after the
announcement of the acquisition.
 Oracle maintains bulk of PeopleSoft engineers but cuts nearly half of
PeopleSoft employees.
 Integration plan was noted as quick and decisive, in order to stop
losing clients.
 Oracle required to maintain support programs with rival companies
through PeopleSoft’s clients, especially from IBM.
Assessing the Results
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16.  After one year, Oracle maintains 95% of PeopleSoft customers.
 Oracle stock performance remains lackluster for one more year.
 Oracle only shows advantage over SAP at late 2006.
Assessing the Results
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17.  Oracle was able to grow its Market Capitalization in relation to
competitors.
Assessing the Results
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18. Conclusion

19.  Acquisition was successful, but Oracle had to pay a high price for that
and spent too much effort.
 Oracle defeated DOJ antitrust suits (other companies to use Oracle as
example).
 Oracle maintains PeopleSoft’s clients.
Conclusion
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20. References:
Bank, David. "After 18-Month Battle, Oracle Finally Wins Over PeopleSoft." WSJ. Wall Street Journal, 14 Dec. 2004. Web. 22 Apr.
2015.
Bloomberg L.P. (2015) Market Capitalization for Microsoft, IBM, SAP, PeopleSoft and Oracle from 2000 to 2014. Retrieved April 21,
2015 from Bloomberg terminal.
Bloomberg L.P. (2015) Shares Outstanding for PeopleSoft 2/28/03 to 5/31/04. Retrieved April 21, 2015 from Bloomberg terminal.
Gilbert, Alorie. "Oracle to PeopleSoft: The Pink Slip's in the Mail - CNET News." CNET News. CBS Interactive, 14 Jan. 2005. Web. 22
Apr. 2015.
Kawamoto, Dawn. "Oracle-PeopleSoft Merger Hits One-year Mark - CNET News." CNET News. CBS Interactive, 11 Jan. 2006. Web.
22 Apr. 2015.
La Monica, Paul R. "Oracle Finally Reaches Deal to Buy PeopleSoft for $10.3B." CNNMoney. Cable News Network, 13 Dec. 2004.
Web. 22 Apr. 2015.
Oracle Corp. (2015). Form 10-K 2007. Retrieved from Oracle website http://www.oracle.com/
Rosch, J. Thomas. Federal Trade Commission. Menlo Park. Federal Trade Commission, 2012. Print.
References
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21. Oracle & PeopleSoft
Paulo Arantes Junqueira, Linde Cook | April 23, 2015