Not so long ago, the confrontation between Oracle and PeopleSoft companies became well known all over the world. Oracle and PeopleSoft were famous companies, which produce software. Those companies were two of three most influential companies, which produce such software, in the world. The executives of the Oracle Company wanted to make it the most influential company in the North America. But the PeopleSoft was on their way. In June 2003, PeopleSoft announce the merger with J. D. Edwards. Several days earlier, Lawrence J. Ellison (Oracle’s CEO) announces that the company would try to buy all of PeopleSoft’s stock, and the price was $5.1 billion. That meant that every share would have cost $16. But the executives of PeopleSoft declined that deal, because according to their words, that would make antimonopoly committee suspicious and $5.1 billion is not enough.
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The fact that Larry Ellison did not even addressed to the board of directors with such a proposition shocked everyone. In some days, the situation became clearer. PeopleSoft merger with J. D. Edwards, and even sent the documents to the Ministry of Justice of the USA and FTC.
The situation became more dangerous. In their interviews, the presidents of PeopleSoft and Oracle were slinging mud at each other, at the companies and customers. Then PeopleSoft filed suit against Oracle. The company was accused in disturbing PeopleSoft to buy J. D. Edwards. The nest days, J. D. Edwards also filed two suits against Oracle. Craig Conway said that Oracle tried to destroy PeopleSoft business and disturb signing the contracts.
After some months of trials and arguing, Oracle raised the bid and in December 2004 they gave $26.5 per share. This month PeopleSoft agreed to accept this offer and, as a result, Oracle paid $10.3 billion instead of $5 billion, as proposed before.
That s business and nobody wants to lose the company, especially such as PeopleSoft. In my opinion, the board of PeopleSoft declined the Oracle’s offer, because of some reasons. First of all, Craig Conway did not want to lose his company. Nobody wants to saw a branch he or she is sitting on, and Conway realized that very well. He knew he would not have the same power and salary as before. Secondly, Conway did not want to let Oracle become a monopolist. He knew that PeopleSoft, remaining the independent company, could hold back price increase. And also, in my opinion, Conway did not agree to such a low price. PeopleSoft was his company and he could not have surrendered that fast, he should have protected his company. And he did that with rising up the prices for every share.
The Oracle’s bid was rather unusual because since months Oracle did not propose any other price for the share. PeopleSoft board thought that Oracle would have increased the price after their rejection, but they did not. On the other hand, the board of directors of PeopleSoft was not as innocent and clear as seems. They have used the so-called “poison pill”. The scheme was not unusual. If somebody (Oracle Company) want to buy more than 20% of the shares, and that is not approved by the PeopleSoft board, the others are allowed to but the same shares at 50% market price. This decision was very wise, because that meant, that even if Oracle bought 20% of shares, it would not have profited in such a deal. On the other hand, the PeopleSoft board would have never approved such a buying. As seen, big business means big stress and requires not only good strategy and team, but also being wise and able to find a way out. Craig Conway did not keep his company, but he had sold it twice as much as proposed in the beginning.
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