Oracle trying to spoil the Peoplesoft/JDE deal.
Just four days after PeopleSoft offered to buy J.D. Edwards, Oracle announces this morning that it is offering to buy PeopleSoft for $5.1 billion. Although by every sign, the PeopleSoft/JDE deal is friendly--the two CEO's claim to have been talking about this for months--the Oracle bid for PeopleSoft is hostile. Furthermore, unlike PeopleSoft and JDE, whose products and markets can be viewed as complementary, Oracle and PeopleSoft are fierce competitors, going head to head in many high end deals, especially in financial applications, human resources, CRM, and e-procurement. So Oracle's offer isn't about any great desire to get a hold of PeopleSoft's products. It's about breaking up the PeopleSoft/JDE combination. Oracle's press release
gives away the motivation: it clearly states that if Oracle wins, it will stop actively selling PeopleSoft products and will re-evaluate the acquisition of J.D. Edwards.
Oracle is only offering a 6% premium over PeopleSoft's current market cap, so the deal is by no means certain to be approved by PeopleSoft shareholders. But Oracle's offer throws the PeopleSoft/JDE deal into uncertainty. My prediction is that Oracle will not be successful in acquiring PeopleSoft. But even if Oracle does not win, the short-term tactical benefit in creating fear, uncertainty, and doubt about the future of BOTH PeopleSoft and JDE in the mind of potential buyers is invaluable to Oracle for sales over the next couple of quarters. With the enterprise systems market starting a modest recovery, Oracle's hostile bid is simply a tactical maneuver to strengthen its own position in sales opportunities this year.