Oracle has upped its hostile offer for Peoplesoft to $19.50 a share. This values its target at $6.3bn, a whopping $1.2bn higher than its opening shot and a premium of 29 per cent higher than Peoplesoft's closing share price on the day before its bid was announced.
According to Peoplesoft, Oracle is simply trying to undermine it with its "atrocious bid", and many analysts seem to buy this argument. We don't: Oracle is playing to win. It is standard tactics in a hostile takeover battle for the bidder to up the ante with an improved offer. Oracle may yet have another bid further down the line.
And if Oracle should fail, its "atrocious" tactics will have secured a better deal for JD Edwards shareholders. Peoplesoft has sweetened its formerly all-share offer for JDE with cash, entirely because of Oracle's predatory action.
But in Anglo Saxon capitalism, publicly quoted companies are either predators or prey. The threat of hostile takeovers keep company boards on their toes. It is astonishing that this is the first entirely hostile bid for a software company in the US (Lotus caved into IBM in days). Such a cosy club is not good for shareholders.
And neither is legal action threatened by Peoplesoft and JDE against Oracle. Let them argue the toss with their shareholders and customers. Oracle's assumption that the enterprise apps world wants suite is shaky. Its plan to migrate the Peoplesoft codebase to Oracle software is audacious, but it's very easy to see the potholes that lie ahead. But if Oracle is prepared and able to stump up enough cash, Peoplesoft shareholders should take the money and run. It's the Oracle shareholders that will pick up the tab, if and when the migration goes West.
Oracle's campaign site is here. ®
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