The legal roadblocks that Oracle Corp. must overcome before it can proceed with its proposed hostile bid for PeopleSoft Inc. could mean months of uncertainty for users of both companies' products.
This week, the U.S. Department of Justice (DOJ) formally requested additional information from Oracle about its plans (see story), and its investigation into possible antitrust or other ramifications of the merger could drag out for months, said experts.
In addition, a July 16 hearing in a Delaware court where Oracle had been expected to try and force PeopleSoft to stop its antitakeover efforts has been delayed until July 25 (see story). That, according to PeopleSoft advocates, could allow PeopleSoft to close its friendly buyout of rival J.D. Edwards & Co, which could further complicate Oracle's takeover plans.
J.D. Edwards CEO and Chairman Bob Dutkowsky noted today that while the DOJ's request for information from Oracle doesn't directly affect his company's merger with PeopleSoft, it does at least slow Oracle's hostile bid.
"The way I suggest you look at it is that it creates a clear and wide-open pathway for J.D. Edwards and PeopleSoft to merge," Dutkowsky said in an interview with Computerworld.
The constantly evolving situation drew mixed reactions from users and analysts.
The DOJ's evaluation of Oracle's plans could go on for three or four months -- or even longer, said Daniel Wall, a lawyer specializing in technology and antitrust issues at the San Francisco office of Latham and Watkins. In the meantime, companies will have to make purchasing and upgrade decisions under a "cloud of uncertainty.
"This could drag on for a couple of months solid before the [merger] clock restarts," Wall said.
Clearly, the delays don't make Oracle's job any easier, and should PeopleSoft and J.D. Edwards combine, "it is highly questionable that Oracle will continue to pursue a deal," said John Moore, an analyst at Dedham, Mass.-based consulting firm ARC Advisory Group Inc. Oracle has expressed ambivalence about the PeopleSoft-J.D. Edwards merger.
PeopleSoft users see the legal maneuvers as a good thing.
"The longer these things stretch out, the more probability of failure [of Oracle's takeover bid], so this may be good news for those who want to see PeopleSoft remain independent," said Peg Nicholson, president of the independent PeopleSoft International Customer Advisory Board. Ideally, Oracle will withdraw its bid and PeopleSoft and J.D. Edwards will finish their transaction, she said.
"I would think time is on PeopleSoft's side," said John Schindler, CIO at L.D. Kichler Co., a Cleveland-based maker of electrical products that uses PeopleSoft ERP products. And if the J.D. Edwards deal is consummated, Oracle will face the new problem of having to raise its bid into the range of US$9 billion to US$10 billion, he said.
On the other side, a couple of Oracle business applications customers reaffirmed their desire to see the acquisition succeed.
"I think the delay will be OK as long as Oracle doesn't lose focus on current business or spend too much to get this deal done," said David Rudzinsky, CIO at medical instruments maker Hologic Inc. in Bedford, Mass. Hologic runs Oracle ERP and CRM software.
"I still support the deal and am hopeful that this will deliver a better overall ERP-CRM solution based on the best a combined Oracle-PeopleSoft has to offer," Rudzinsky said.
"If the merger is a good idea, then it is one that is worth pursuing," said Kyle Lambert, vice president of information solutions at hops maker John I. Hass Inc. in Washington. "So if Oracle is serious about the PeopleSoft merger, a delay of months due to the Department of Justice investigation does not bother me at all."