Prepare Now for Oracle's Takeover
Despite numerous legal and regulatory hurdles, more and more analysts are
advising their clients to prepare for Oracle's Last week, a federal judge rejected
the U.S. Department of Justice's effort to block Oracle's takeover bid for
PeopleSoft. The 164-page ruling handed Redwood Shores, Calif.-based Oracle a
major victory in its $7.7 billion plan to take over the rival software
provider.
And while no one is claiming total victory just yet, market analyst
groups like Forrester Research, Yankee Group and META Group are advising
their clients this week on how to best deal with an enterprise resource
planning (ERP) world dominated by market leaders SAP AG "As Oracle tries to complete the takeover, PeopleSoft customers must
learn to live with a level of uncertainty regarding the future of their
software applications and maintenance services," Forrester Research Vice
President Paul Hamerman said in a briefing sent to investors Tuesday.
"Enterprises are experiencing FUD - fear, uncertainty and doubt. They
wonder whether they picked the right ERP vendor. They want to know what will
happen in future -- regardless of what ERP vendor they use," Yankee Group
analyst Mike Dominy told internetnews.com.
During a conference call with clients and the press, David Yockelson, META Group senior vice president, said the judge's
decision is "a great concern, as choice is being wiped off the board." But
even if all the deal goes through, he said, "Oracle must still make the
acquisition work and ultimately drive growth as a result."
Several roadblocks remain. The government is expected to file its appeal
within 60 days. PeopleSoft is preparing its own lawsuit
in November to prevent the takeover. The European Commission also is waiting
to weigh in on the acquisition after asking for another round of documents
from Oracle. PeopleSoft has a poison pill clause in its charter, as well
as its Customer Assurance Program. Ultimately, to avoid a proxy war, shareholders must be
fully convinced the deal would be beneficial.
PeopleSoft is still attractive to other companies. Approximately $1.6
billion, or one third of its value, is in cash. The company has a number of
assets, including its customer base and CRM Many of the analyst firms have suggested a second company or "white
knight" could emerge and offer a price more competitive than Oracle's $21
per share tender offer. Microsoft "Given PeopleSoft's actions and posturing to date, it is unlikely that it
will simply give up," Yankee Group's Dominy said. "PeopleSoft can save
itself if the EC rules against the merging of Oracle and PeopleSoft."
acquisition of PeopleSoft,
especially those who are JD Edwards customers.
and
Oracle.
continuously tops the
short list in many circles. Accenture,
IBM
and HP
have also been mentioned, but are less likely,
because the price is likely set too high for other suitors. Yockelson
suggests that PeopleSoft could still be saved through a holding company or
venture capitalists.