PeopleSoft users applaud antitrust move; Oracle plots its strategy for fighting back
The U.S. Department of Justice last week filed a civil antitrust lawsuit in an effort to block Oracle Corp.'s $9.4 billion takeover bid for business applications rival PeopleSoft Inc., a move that buoyed PeopleSoft users who oppose the hostile offer.
DOJ officials said an Oracle/PeopleSoft merger would eliminate competition between two of the top vendors of finance and human resources software, resulting in higher prices and fewer choices for users, as well as reduced innovation. They added that Oracle, PeopleSoft and SAP AG are the only vendors with enterprise-class applications that can meet the needs of large companies and government agencies.
"I think the decision here was very clear," Assistant Attorney General R. Hewitt Pate said Thursday during a press conference. "Going from three to two companies in this market is a competitive problem that needed to be stopped. Under any traditional merger analysis, this is an anticompetitive deal."
Jim Prevo, CIO at PeopleSoft user Green Mountain Coffee Roasters Inc. in Waterbury, Vt., said he was pleased by the DOJ's move and hopes that the agency prevails in the case. "Oracle's hostile bid represents nothing but bad news for PeopleSoft customers," Prevo said.
"I look forward to PeopleSoft being able to dedicate their time and money to delivering additional value to customers," said William Gabby, North American operations manager at Cargill Inc.'s Global Financial Solutions unit in Minnetonka, Minn.
Oracle isn't giving up, though. In response to the DOJ's suit, the software vendor did drop its plan to try to take control of PeopleSoft's board at the latter company's annual meeting on March 25. But Oracle claimed that the DOJ's case against the takeover bid "is without basis in fact or in law" and said that it will "vigorously challenge" the suit.
In a filing with the Securities and Exchange Commission earlier last week, Oracle said it plans to draw parallels to the DOJ's 2001 attempt to block SunGard Data Systems Inc.'s acquisition of Comdisco Inc.'s disaster recovery business. The DOJ also sued to prevent that deal, saying it would reduce the disaster recovery market from three major vendors to two. But a federal judge rejected the DOJ's arguments and allowed the acquisition to proceed.
Making a Case
But Pate said the DOJ is confident that it has ample data to back up its antitrust claims. "This is a case that has its own facts and its own evidence that we're going to present," he said in response to a question about how Oracle's bid to acquire PeopleSoft compares with the deal between SunGard and Comdisco. "I think the result is going to be clearly in favor of blocking this transaction."
Seven state attorneys general are joining the DOJ in the suit, which was filed in U.S. District Court in San Francisco. The DOJ took action two weeks after its staff recommended that the agency try to stop Oracle [QuickLink 44758].
Craig Conway, PeopleSoft's president and CEO, called on Oracle to abandon its 9-month-old takeover bid, saying in a statement that "the antitrust day of reckoning has arrived."
But Kyle Lambert, vice president of information solutions at Washington-based hops grower John I. Haas Inc., feels differently. "It would be safe to say that I'm disappointed with the decision," said Lambert, an Oracle user.
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By Marc L. Songini and Stacy Cowley
The U.S. Department of Justice last week filed a civil antitrust lawsuit in an effort to block Oracle Corp.'s $9.4 billion takeover bid for business applications rival PeopleSoft Inc., a move that buoyed PeopleSoft users who oppose the hostile offer.
DOJ officials said an Oracle/PeopleSoft merger would eliminate competition between two of the top vendors of finance and human resources software, resulting in higher prices and fewer choices for users, as well as reduced innovation. They added that Oracle, PeopleSoft and SAP AG are the only vendors with enterprise-class applications that can meet the needs of large companies and government agencies.
"I think the decision here was very clear," Assistant Attorney General R. Hewitt Pate said Thursday during a press conference. "Going from three to two companies in this market is a competitive problem that needed to be stopped. Under any traditional merger analysis, this is an anticompetitive deal."
Jim Prevo, CIO at PeopleSoft user Green Mountain Coffee Roasters Inc. in Waterbury, Vt., said he was pleased by the DOJ's move and hopes that the agency prevails in the case. "Oracle's hostile bid represents nothing but bad news for PeopleSoft customers," Prevo said.
"I look forward to PeopleSoft being able to dedicate their time and money to delivering additional value to customers," said William Gabby, North American operations manager at Cargill Inc.'s Global Financial Solutions unit in Minnetonka, Minn.
Oracle isn't giving up, though. In response to the DOJ's suit, the software vendor did drop its plan to try to take control of PeopleSoft's board at the latter company's annual meeting on March 25. But Oracle claimed that the DOJ's case against the takeover bid "is without basis in fact or in law" and said that it will "vigorously challenge" the suit.
In a filing with the Securities and Exchange Commission earlier last week, Oracle said it plans to draw parallels to the DOJ's 2001 attempt to block SunGard Data Systems Inc.'s acquisition of Comdisco Inc.'s disaster recovery business. The DOJ also sued to prevent that deal, saying it would reduce the disaster recovery market from three major vendors to two. But a federal judge rejected the DOJ's arguments and allowed the acquisition to proceed.
Making a Case
But Pate said the DOJ is confident that it has ample data to back up its antitrust claims. "This is a case that has its own facts and its own evidence that we're going to present," he said in response to a question about how Oracle's bid to acquire PeopleSoft compares with the deal between SunGard and Comdisco. "I think the result is going to be clearly in favor of blocking this transaction."
Seven state attorneys general are joining the DOJ in the suit, which was filed in U.S. District Court in San Francisco. The DOJ took action two weeks after its staff recommended that the agency try to stop Oracle [QuickLink 44758].
Craig Conway, PeopleSoft's president and CEO, called on Oracle to abandon its 9-month-old takeover bid, saying in a statement that "the antitrust day of reckoning has arrived."
But Kyle Lambert, vice president of information solutions at Washington-based hops grower John I. Haas Inc., feels differently. "It would be safe to say that I'm disappointed with the decision," said Lambert, an Oracle user.
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By Marc L. Songini and Stacy Cowley
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