Europe’s antitrust regulatory body could restart its probe into Oracle’s
unsolicited bid for PeopleSoft as soon as next month, according to published
reports.
The European Commission, the regulatory body of the European Union, is
following its U.S. counterparts in an evaluation of the now $7.7 billion
transaction that would join Redwood Shores, Calif-based Oracle and Pleasanton, Calif.-based PeopleSoft
.
After its initial inquiry, the commission had suspended
its investigation back in April as it wanted to wait for the U.S. courts
to resolve its case.
Now sources close to the deal quoted by AFX News and ECT News suggest the
EC could “start the clock…within weeks” even before the U.S. courts render
their decision. The timetable was allegedly sped up because the EC received
enough of the documents it requested from Oracle. A spokesperson with Oracle
declined to comment on either the EC’s investigation or its U.S. court case.
District Judge Vaughn Walker is currently reviewing a U.S. Department of
Justice (DoJ) request to block Oracle’s bid for PeopleSoft. The
government spent a little more than four weeks trying to prove that the
deal would limit choice and create uncertainty in the enterprise resource
planning (ERP) market.
Oracle’s lawyers refuted each claim and called
several witnesses, including CEO Larry Ellison, to argue that the government’s
ERP definition is too narrow and must be widened to include Microsoft and
IBM, as well as Lawson, Fidelity and Ceridian.
The judge has called for a hearing on August 13 in San Francisco to
finalize requests by third-party companies like IBM , SAP
, Microsoft
and others that submitted
sensitive corporate information to help the DoJ and 11 states with their
case.
Already the trial uncovered plans by Microsoft to acquire SAP
and possibly PeopleSoft,
as well as Oracle’s business practices when it comes to giving discounts
to undercut the competition. A spokesperson with the DoJ told
internetnews.com that the government will file its opinion with the
courts on the third-party issue later today.
Ken Marlin, managing partner of mergers and acquisitions investment bank Marlin & Associates,
noted that if Oracle wins, it will still have to deal with lawsuits
by the EC and several states.
“The real question is what will PeopleSoft do if the DoJ loses,” Marlin
told internetnews.com. “Most people will expect PeopleSoft to appeal.
They probably will. But at that point, it might be smart for PeopleSoft to
simultaneously try to negotiate with Oracle (or with a friendlier suitor,
e.g. Microsoft of IBM).
“Remember that the
PeopleSoft board gave two reasons for turning down Oracle’s offer: It would
never pass anti-trust muster and the price offered was not adequate.
If the first issue were to go away, then they are left with only price,” said Marlin. “It’s
fairly clear to us that PeopleSoft’s stock price has gained only because of
speculation that Oracle will win. Note that PeopleSoft’s stock price gained
in spite of reduced economic forecasts by PeopleSoft.”
PeopleSoft’s stock price has also been bolstered by recent market wins
from Oracle and SAP. The company said this week that it secured a contract
with the U.S. Department of Treasury for its PeopleSoft
Enterprise ePerformance to improve “Treasury HR Connect,” the Department’s
enterprise-wide human resources system serving approximately 140,000
employees and managers.
Last week, PeopleSoft recorded its largest
contract ever — $50 million — with Mexico’s Tax Administration Service,
the equivalent of the U.S. Internal Revenue Service. The contract was sorely
needed, as PeopleSoft also reported to the Securities and Exchange Commission
(SEC) that it has so far spent upwards of $70 million to fight off Oracle’s
advances.
Stephen O’Grady, senior analyst at market research firm RedMonk, suggests
the effects of the trial are already sending waves through the
enterprise Application vendors market.
“PeopleSoft certainly indicates that Oracle’s application partners should
at once consider the possibility that they’re an acquisition target, and also
be concerned about the possibly of competing with their partner should
Oracle choose to enter new markets,” O’Grady told internetnews.com.
“With respect to perceptions, I think Oracle hasn’t particularly hurt itself,
at least perception-wise, and has certainly bled their acquisition target
with legal and finance fees. Add to that the fact that IBM would be
negatively affected by the acquisition if it goes through, and Oracle is
probably not displeased with the path the talks have taken.”
Marlin also said once the publicity dies down, his firm “would not be
surprised to see Microsoft seek to acquire one of the other players in this
market — perhaps Lawson.”
