The three companies are dominant players in the market for ERP
(Enterprise Resource Planning) software, basically software that
helps a business to manage, diverse processes that include product
planning, parts purchasing, maintaining inventories, interacting
with suppliers, providing customer service, and tracking
orders.
Signs of consolidation in the ERP market began on 2nd June when
PeopleSoft and JD Edwards & Company announced a definitive
agreement for PeopleSoft to acquire JD Edwards, creating the
world's second largest ERP software company, in a transaction
valued at approximately $1.7 billion.
Combined, the companies have approximately $2.8 billion in
annual revenues, 13,000 employees and more than 11,000 customers in
150 countries.
But in a surprise move on Friday, Oracle then submitted a cash
tender offer of $16 a share to PeopleSoft – a deal which does not
include the proposed acquisition of JD Edwards. Oracle, chaired by
Larry Ellison, is the world's second largest software company,
after Microsoft.
In a statement, PeopleSoft CEO Craig Conway called the move
"atrociously bad behaviour from a company with a history of
atrociously bad behaviour. Obviously it is a transparent attempt to
disrupt the acquisition of JD Edwards by PeopleSoft announced
earlier this week".
PeopleSoft and its Board of Directors are required by law to
review all cash tenders regardless of intent, and confirmed that
they would provide a definitive recommendation to shareholders
within the authorised timescale. In the meantime, PeopleSoft
advised its shareholders to take no immediate action.
On Monday morning, Oracle filed its offer with the Securities
and Exchange Commission. Later the same day came a statement from
JD Edwards CEO, Robert Dutkowsky.
Dutkowsky told a press conference that Oracle's takeover would
create "serious antitrust problems." These, he said, would need
months of investigation by regulators in both the US and
Europe.
Mr Dutkowsky was concerned that the takeover would reduce
competition and eliminate "at least one of its major competitors,"
adding that "This harm to customers is exactly what antitrust laws
are intended to protect against."
