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Oracle's Hostile Takeover Bid For PeopleSoft
rkuris writes "Oracle has launched a 5.1 billion dollar cash hostle takeover bid against Peoplesoft. PeopleSoft's CEO Craig Conway (a former top executive for Oracle) called Oracle's offer 'atrociously bad behavior from a company with a history of atrociously bad behavior.' 'Obviously it is a transparent attempt to disrupt the [1.7 billion dollar friendly] acquisition of J.D. Edwards by PeopleSoft announced earlier this week.' The week's events have reopened old wounds between the companies, which have a history of hostility and name calling."
While someone with more in depth information regarding securities training could probably elaborate, it's basically an attempt to purchase shares in the company sufficient to control it without the acquiesence of the company's board of directors. For example, on form of "hostile takeover" is simply acquiring sufficient controlling shares on the open market. If you have > 50%, you control the company.
C//
it was not 18 bucks per share the other day when this offer was first anounced.
it was around 10 dollors per share.
I am the Alpha and the Omega-3
here you go
Let me put it like this: my bro. in law is a GM at a industrial trucking company. He's got a masters in probability and statistics but isn't "in the business" per se. When he talks to me about "his weekly Oracle having problems," he's not thinking of a database -- he's thinking of the Oracle Apps reports that come out on his printer.
In enterprise, "Oracle" is like "Xerox" or "Kleenex" -- it's the apps, the engine is invisible. If Peoplesoft bought J.D. Edwards, they'd challenge Oracle on that level.
If Microsoft had any sense they'd sell the biz apps. The DB is irrelevant -- it's the schemas that people buy.
In very simple terms, a hostile takeover is when the management of a company rejects a takeover offer, and instead the offer is presented to the individual shareholders. If enough shareholders sell, then the takeover is effectively complete because the acquiring company has enough votes to install their own management. There are various ways of defending against hostile takeovers (do a google search on "poison pill"), but if the offer is high enough, they can be overcome.
Normally with public companies there isn't any one person with a majority share of the business. Business decisions are made by the CEO and board of directors. The board is made of industry leaders and share holders. share holders vote on the board to make major decisions and to elect corporate officers (CEO, CFO, CTO, EIEIO, etc.). A hostile take over is when a company starts to purchase as many voting shares as possible in order to gain control of the board. It is typically done by offering a greater than market value price for the shares. Most share holders don't have their blood sweat and tears into the company. It is an investment for the. When given the option to cash out and make a bunch of money they will. So, Oracle is putting up a huge amount of money to try to buy the shares from those willing to sell. It is hostile because oracle isn't really buying the company. It is buying control of the board. If it works Oracle will have control of the company and will be able to appoint its own board and CEO.
Now I hope and pray that I will But today I am still, just a bill
you offer to buy shares above the price they are traded on the open market.
once you have more than 50% you control the company, so decided that it should merge with your company, or die, or whatever
-- Don't Tase me, bro!
Wow, talk about a severe lack of perspective.
Oracle is using its cash on hand to cannibalize another company, steal its customer list, terminate development of its products, lay off 8000 tech workers, and turn Silicon Valley into even more of a smoking crater than they have already by outsourcing so much of their own development work to the Third World.
But they support Linux, so that's all OK! Oracle deserves our support!
Oracle is trying to gain controlling interest in People Soft without the blessing of the board of directors of People Soft.
Proxies can be considered the voting rights of the stock.
Green mail is two things, primarly it would be People Soft bribing Oracle by buying back whatever shares Oracle accumulated -- giving Oracle a nice profit. Another form of Green Mail would be Oracle offering to buy huge blocks of stock off of People Soft stock holders at premium prices -- or simply gaining the proxy of them.
Poison Pills would be People Soft doing things to wreck the company and make it not so attractive as a takeover. Poison pills are usually a package of things they do. But the most adverse is to take out huge loans to buy back its own stock, Licensing company IP, and even awarding employees huge stock options. Basicaly they are throwing road blocks up and salting the earth.
White Knights are 3rd party corporations that come in and start buying People Soft and forcing the stock price up and making Oracle have to deal with two companies rather then just one. White Knights often really Gray Knights in disguise and are trying to make a profit too. Usually hostile takeovers are preceeded by months of slowly accumulating the stock of the takeover target. However there is a point, I think 5% at which the company has to notify the other company that they are targetted for aquisition. And I think the targetted company can get an injuntion against the other company enjoining them from buying more stock until the shareholders meet.
They are long and costly bloody battles that are usually done to scuttle or destroy the targetted company and the real benefit to the company initiating it is gaining market share, intellectual property, and other desired assets to the detriment of the targetted company.
Hey, I think we oughta code this up and make an mmorpg out of it!
Thats my bastardization of hostile takeovers.
A PeopleSoft employee, and I can tell you that we aren't selling to Oracle.
Acquiring JD Edwards is going to make us #2 in the field, and Oracle #3, which is why Ellison wants to take us over, kill our product, and terminate all of our jobs.
Craig Conway (PeopleSoft CEO) has already told all of us that he won't let "Ellison kill PeopleSoft".
On top of all that, the offer made to PeopleSoft by Oracle per share is now lower than the price it's trading at. Take that into account, plus what the company will be worth after acquiring J.D. Edwards, and Oracle won't be able to convince the shareholders to go along with it.
Vonal Declosion
There are some contractual things you can't get out of. You can't cancel existing contracts, which is the reason a "poison pill" defense sometimes works, and there are various contractual guarantees made to major investors that can create "classes" of shareholders (preferred, common, etc.), which makes it a little more complicated than just a question of percentages.
However, the answer to your question is mostly "yes". As 51% shareholder, you can typically completely replace the board of directors, because the board is elected by the shareholders (which means the owners) to represent their interests. New 51% owners usually want new representatives for their new interests, and the 49% owners can't raise the votes to stop them.
Then, since the CEO works for the board, the new board appoints a new CEO, who then replaces the senior execs, who all report to the CEO. They can then replace anyone below them who doesn't support the new regime.
I should add that the term "hostile takeover" is frequently just the viewpoint of the existing management. It's hostile to them because they may be thrown out by the new owners. It may not be hostile at all from the perspective of the existing small-scale shareholders -- the "outsiders".
Another possibility (in some cases) is that the old insiders club (the board and their pet CEO and his cronies) may have been milking the company for their own personal gain and there was nothing the small-scale shareholders could do about it. The big guys are making a pile of money off the company, while the company itself goes nowhere because it's being managed for the benefit of the top management, not the common shareholders.
Then a new team comes to town and offers a lot more money for common shares than the shareholders were going to get any other way. Whether the shareholders sell to the new guys or keep their now-higher-valued shares, the game has changed. Now, the old management tells everyone that the new guys are "hostile", but that may not be the way everyone sees it. They may end up more corrupt or incompetent than the old management, or they may be the first good thing for the common shareholders in years, but either way they'll be called "hostile" by the old management.
"Those who have never entered upon scientific pursuits know not a tithe of the poetry by which they are surrounded."
Sun's original intentions were not to open the source. They had originally hoped to use it as an alternative to Microsoft Office, but that dream was quickly squashed. They did the next best thing (for which I am grateful).
Note that StarOffice, the full product, is not open source. It becomes open source (and integrated into Open Office) as features trickle into the public domain. Certain parts of StarOffice are tied up in IP restrictions. Fortunately they are not too important.
THIS THING CAN TURN ON A DIME, MACROSSZERO STYLE ALSO FUCK BETA, ~NYORON