Oracle`s offer to buy PeopleSoft, which itself is in the process of acquiring JD Edwards, has met with scorn from both PeopleSoft and industry analysts.
Oracle said on Friday that it would make a cash offer of $16 per PeopleSoft share, amounting to about $5.1 billion, starting today.
Atrociously bad behaviour from a company with a history of atrociously bad behaviour.
Craig Conway, president and CEO, PeopleSoft
PeopleSoft president and CEO Craig Conway called the offer "atrociously bad behaviour from a company with a history of atrociously bad behaviour".
He says the offer is a "transparent attempt to disrupt the acquisition of JD Edwards".
However, he says PeopleSoft and its board are required by law to review all cash tenders and will provide a definitive recommendation to shareholders after the review.
Andrew Ball, enterprise applications analyst at Frost & Sullivan, says the offer is unlikely to be accepted since it is less than PeopleSoft`s current market value.
"This astonishing offer is a supreme piece of opportunism by Oracle to take advantage of the strategic uncertainty caused by PeopleSoft`s acquisition of JD Edwards," he says.
"Although Oracle says it is interested in the JD Edwards deal, in reality Oracle is asking shareholders to choose between its vision and the vision of PeopleSoft`s management team."
Ball says it is inconceivable that PeopleSoft`s management would agree with the details in the bid.
"Although Larry Ellison has consistently argued that the software industry must consolidate, this deal would be a consolidation too far."
"SAP is not dominant in the critical North American enterprise application market and Microsoft is focusing only on small and medium enterprises. It is far fetched to argue that only by bringing together Oracle`s application business with PeopleSoft`s business is there room for a third vendor.
"Instead, this announcement looks like Oracle putting a stick through the wheel of its competitor in the hope of unseating its rider," he says.
"$5.1 billion is an extraordinarily expensive stick, but as this is less than PeopleSoft`s current market value Oracle`s cash is likely to remain in its own bank and the flurry of excitement that this bid will generate will blow over."
"The only lasting consequence may be the addition of an extra edge to the competition between Oracle and PeopleSoft."
In the US, analysts have labelled the bid as nothing more than a stunt. Several say that the cultural differences between Oracle and PeopleSoft are immense.
According to Reuters, Oracle`s bid has widely been seen as defensive play after the announcement that PeopleSoft was buying JD Edwards.
The $65 billion market for business software is highly fragmented and has long been considered ripe for consolidation.
Oracle says if it completes the acquisition of PeopleSoft it will review whether, and on what terms, it will support the acquisition of JD Edwards.
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