Ellison Talks Tough on Bid for PeopleSoft
Larry Ellison has a message for those who doubt the sincerity of Oracle Corp.’s hostile bid for rival PeopleSoft Inc.: Only the feds can force him to surrender.
Speaking Wednesday to Wall Street analysts gathered at Oracle’s Redwood City, Calif., headquarters, the chief executive said that if Oracle failed to win a court fight to disable PeopleSoft’s takeover defenses, he would wage a campaign to unseat PeopleSoft’s board of directors.
Only antitrust regulators would deter him, he said.
“We’re very determined to see this thing through to the end.”
At the same time, Ellison defused speculation that the database giant would sweeten its $6.3-billion tender offer for PeopleSoft, which specializes in making software programs for managing human resources.
Perched atop a sleek stool with a wireless microphone in hand, Ellison said he saw three ways the acrimonious dispute could end:
In his worst-case scenario, the Justice Department will block Oracle’s all-cash bid on antitrust grounds, putting an end to Oracle’s quest for PeopleSoft.
If the Justice Department doesn’t intervene, Oracle will press a Delaware court to order PeopleSoft to drop its so-called poison pill, which would make a hostile bid prohibitively expensive by flooding the market with new shares.
And if Oracle loses that fight, the company will run its own slate of candidates for PeopleSoft’s board.
“It could take until June of next year,” Ellison said, “when there’s going to be a vote for a new board.”
Analysts said they were surprised by Ellison’s professed willingness to wait until June if necessary, rather than raise his bid to sway PeopleSoft’s reluctant board. However, some said his comments could be so much posturing.
The most likely scenario, said analyst Doug Crook of Sterling Financial, has the Justice Department approving the deal, the Delaware courts keeping the poison pill intact -- and then the real talks beginning, with Oracle raising its offer.
“Ultimately, I think it goes through,” Crook said. PeopleSoft’s directors “just have to find a way to save face.”
Ellison signaled that he wouldn’t be dissuaded if PeopleSoft succeeded in completing its pending merger with smaller rival J.D. Edwards & Co. Oracle executives repeatedly have criticized that deal as risky for PeopleSoft. In his typically casual manner, Ellison laid out his argument that an Oracle-PeopleSoft-J.D. Edwards combination would boost competition in the highly fragmented market for business applications software, rather than diminish it. Oracle is the No. 2 player in that market, followed by PeopleSoft, then J.D. Edwards.
Germany’s SAP holds the No. 1 spot.
“We have one dominant player,” Ellison said. “SAP is bigger than Nos. 2, 3 and 4 combined, as they are proud of saying. Maybe 2, 3 and 4 should combine and give them a run for their money.”
He also repeated his promise to continue supporting and improving PeopleSoft products if the acquisition goes through.
Although Oracle wouldn’t integrate PeopleSoft products into Oracle offerings, Ellison said, PeopleSoft programmers would rewrite the most important functions from scratch as part of new versions of Oracle’s software.
He complained that PeopleSoft was trying to scare its customers by emphasizing Oracle’s earlier comments on its plans to stop actively selling PeopleSoft programs.
“It is ridiculous to think we would do anything to offend the customers we just spent $6.3 billion to acquire,” he said.
He also made several pointed comments directed at Craig Conway, a former protege who is now PeopleSoft’s chief executive.
“I didn’t say we were going to kill anything,” Ellison said. “I think at one point Craig thought I was going to kill his dog. But if Craigie and [his dog] Bear were standing next to each other, and I only had one bullet, trust me, it wouldn’t be for the dog.”
The assembled Wall Street analysts responded to that with laughter, prompting Ellison to muse that he was giving his public relations team heart attacks.
Ellison and the other Oracle executives who spoke to analysts said the company planned to make more acquisitions -- preferably friendlier ones -- that would allow it to offer a more complete suite of functions running on top of Oracle’s core database software.
The company is most interested in acquisitions that make data easier to manage, and they said they would act opportunistically.
“We’d be interested in buying almost anything -- your house, if the price was right,” Ellison said.
For the moment, software makers Ariba Inc., Commerce One Inc. and I2 Technologies Inc. are too small to be attractive, he said, and the larger BEA Systems Inc. is too expensive.
Fielding generally friendly questions from the analysts, Oracle executives elaborated on the company’s vision for the technology industry and their company’s place in it.
As in previous discussions, Oracle executives said they believed that companies would spend a smaller percentage of their budgets on information systems and that consolidation among vendors would accelerate.
Ellison said firms that focus on stand-alone products wouldn’t survive and that even companies such as PeopleSoft that have a limited array of offerings were doomed.
Citing Microsoft Corp.’s use of the Office suite of applications to defeat the makers of solid alternative word processors and spreadsheets, Ellison said: “The suites always win.”
