http://www.businessweek.com/bwdaily/dnflash/nov2004/nf20041122_2141_db035.htm

PeopleSoft: Beaten but Not Quitting
Despite the overwhelming number of shares tendered to Oracle, the target's board won't budge. Final stop: A proxy battle?

Larry Ellison & Co. had a nice weekend, but they could be in for a contentious holiday season. Just before 1 a.m. on Saturday, Nov. 20, the tally was officially announced: More than 60% of the outstanding shares of rival software maker PeopleSoft (PSFT ) had been tendered to Oracle (ORCL ), the Silicon Valley database giant. The total was a resounding affirmation from PeopleSoft shareholders that they believe Oracle's $24-per-share cash offer, or about $9.2 billion, represents fair value for the Pleasanton (Calif.) company.

While many analysts and investors had expected Oracle to prevail in the PeopleSoft shareholder vote, even George Bush would have wished for a margin of victory this big. And Oracle execs were quick to ask their PeopleSoft counterparts to negotiate a final deal. "We believe it is time to bring this matter to a close, for the good of PeopleSoft's shareholders, customers, and employees," Oracle Chairman Jeffrey O. Henley said in a statement.

Yet, PeopleSoft's board of directors still isn't ready to concede. In a written statement released Nov. 20, the board reaffirmed that it believes $24 per share is too low. And the board, which has rejected every Oracle offer since it made its first overture in June, 2003, including a $26-per-share bid earlier this year, shows no signs of backing down. "We are confident that in the time leading to our 2005 annual [shareholder] meeting we will continue to demonstrate PeopleSoft's superior value to our shareholders," said A. George "Skip" Battle, chairman of the PeopleSoft's board's transaction committee, in a statement.

PULLING A PILL? The gauntlet -- if any are left in this nasty 17-month hostile takeover fight -- has been thrown. Since PeopleSoft's board still controls a so-called poison-pill provision that would allow it to flood the market with new shares and make a takeover attempt too pricey even for cash-rich Oracle, it still controls PeopleSoft's fate. Oracle is attempting to get the poison-pill provision killed in a Delaware court, and both sides are due back before Judge Leo Strine on Wednesday, Nov. 24. While legal experts say courts rarely find grounds to pull a poison pill, Oracle execs hope the shareholder vote will sway Judge Strine.

What about all those tendered shares? Actually, they aren't actually being sold. The tender is more like a shareholder's promise to sell. So Oracle won't actually buy the shares until the poison pill is dropped. And in the absence of a legal ruling, PeopleSoft's board of directors makes the call on the sale. Shareholders have no direct control over it. That's why Oracle won't buy PeopleSoft shares outright until the poison pill is set aside.

So what's next? PeopleSoft Chairman Battle is all but daring Oracle CEO Ellison to mount a proxy fight to remove PeopleSoft's board of directors. By November's end, Oracle must nominate its own slate for PeopleSoft's board for the annual shareholder meeting, expected to be held in the spring.

TROUBLING QUESTIONS. Expect Ellison to do exactly that. Oracle had nominated a slate for PeopleSoft's 2004 shareholder meeting but withdrew it when federal regulators attempted to stop the takeover on antitrust grounds. Since then, however, a U.S. District Court judge in San Francisco gave Oracle the green light more than three months ago, as have European regulators.

Oracle has deftly knocked down the PeopleSoft board's defensive bulwarks, one by one. Now Ellison & Co. stand at the gates. To keep fightng, PeopleSoft's board must run against the very clear wishes of its own shareholders. And that would raise troubling questions of who really owns this company: investors or an elite cadre of insiders led by the directors.

I hope the internal 'elite' clings on as long as possible. Judging from the article's wording it's fairly obvious to say that it is favouring the Oracle take-over. But I disagree on whether the 'troubling question' is really who owns the company (investors vs directors) but whether investors are not blinded again by their greed in piling up the cash. Industry - and not only IT - has been hit with 'merger mania' over the last decade or so, creating over bigger, stronger monolothic companies up to the point that there is no 'healthy' competition in the market anymore and tendancies towards monopoly positions are bigger as ever before. This is the real 'troublesome' evolution IMHO.

Don't you think this gives the smalller companies more of a chance in the market?

Before we had Oracle(limited offerings) JD Edwards, PeopleSoft and of course SAP as the major players. So if you were a major company looking to implement an ERP system and doing the due dilligence you would be safe looking at the options from these 4 companies and going no further. i.e. The SSA's wouldn't be invited to tender.

Now it will be just SAP and Oracle forcing alot of companies to look at others to complete their due dilligence when choosing their system.

And then of course there's the fact that Peoplesoft customers will now be looking for alternatives fast, as Ellison and Oracle have made plenty of noises about not keeping JD Edwards and Peoplsoft software going but moving customers onto their own software. Their more recent statements didn't support this intention but I think they were intended to get the Peoplesoft deal done and we will see the real picture when the takeover is complete.

Think SSA are in a good position to do well out of this merger!

Don't you think this gives the smalller companies more of a chance in the market?

I don't see how? How can small vendors better compete in a market that is controlled by a handful of big players? The bigger in size and smaller in number these players get, the more control they can exercise over the market and define its internals. Possibly they will leave some crumbs for the niche players but I wouldn't call this real competition.

Before we had Oracle(limited offerings) JD Edwards, PeopleSoft and of course SAP as the major players. So if you were a major company looking to implement an ERP system and doing the due dilligence you would be safe looking at the options from these 4 companies and going no further. i.e. The SSA's wouldn't be invited to tender.

Now it will be just SAP and Oracle forcing alot of companies to look at others to complete their due dilligence when choosing their system.

Maybe they will look at other players because they have to but will it make a difference in reality? I very much doubt this as the smaller competitors will never be able to match the heavyweights in muscle power. You can see similar events happening in the open-source world where potential customers are 'bullied' into locking themselves down with a propietary vendor rather than going for an open and standard solution.

And then of course there's the fact that Peoplesoft customers will now be looking for alternatives fast, as Ellison and Oracle have made plenty of noises about not keeping JD Edwards and Peoplsoft software going but moving customers onto their own software. Their more recent statements didn't support this intention but I think they were intended to get the Peoplesoft deal done and we will see the real picture when the takeover is complete.

Think SSA are in a good position to do well out of this merger!

Only the future will tell!

http://www.theregister.co.uk/2004/11/25/oracle_poison_pill_case_delay/

Although this trick has no chance of succeeding (this technique would provide a means for all corporate boards thwart takeovers and keep their jobs), the article provides an insight into the perceived "value" of baan assets (software).

The quote from the above link, "... In its defense against Oracle's hostile takeover bid, Peoplesoft promised to give its customers rebates worth between two and five times their licensing fees, in the event of a takeover. The deal, which represents a liability of at least $800m, would begin if the company is bought in the next two years, and if support for product lines is reduced within four years...", indicates that Peolesoft's licensing fees must be in the order of $400m pa while the value of the takeover is around $8 or 9 billion or roughly in the order of 15 to 20 times the annual licencing fees.

Although we do not know the value of SSA revenue for Baan fees (other than our own company's), their published figures and commentary indicate that it is very good. Say in the order of $100m at least. If we we to apply the 15 to 20 factor to get market value baan would have been worth $1.5 billion but no one other than SSA was prepared to pay $130 million.

Like it or not I think we have to accept the market's appraial of the true value of the Baan asset. Those of us who still cling to our memory of Baan being in the ERP big league need a reality check. Time has moved on. Baan/ERPLN is not in the big league and it is my clear view that SSA's only strategy is to "harvest" the ongoing fees from its very astute buying up of a good selection of once highly regarded legacy software. Whilst it may sell some additional modules to existing customers. For any new names it will not be competing with the tier 1 players with leading edge products but with the many players in tiers 2 and 3.

Terry

http://story.news.yahoo.com/news?tmpl=story&cid=580&e=1&u=/nm/20041213/bs_nm/tech_peoplesoft_dc


NEW YORK (Reuters) - Oracle Corp. (Nasdaq:ORCL - news) on Monday said rival business software maker PeopleSoft Inc.'s (Nasdaq:PSFT - news) board has accepted a sweetened purchase offer of about $10.3 billion, ending a long and bitter hostile takeover battle.

Remind me again....

For how much was Baan sold to Invensys?

:D

BAAN Company was sold to Invensys for about USD 800 million but then Invensys sold BAAN to the GAP buddies (one of them Tom Tinsley and also the owners of SSA) for about USD 250 million.

I know this is all peanuts compared to the Oracle - Peoplesoft deal.
Imagine what the price would have been if Microsoft succeeded in buying SAP last year.

Regards,

Edwin

If we stick to the trend, Baan should be up for sale in 2008 for under $80M.

If we all ante up, we should be able to come up with that amount.

I'm good for $20 and change.

:D

Maybe we can convince Pat to buy it. With your $20 he only needs another $79,999,980 dollars. :)

Mark