Antitrust concerns raised over hostile takeover by Oracle

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."