Oracle to launch 5.1 billion dollar hostile offer for PeopleSoft

AFP ^ | 6/6/03 | AFP Staff

[Pro-Bush]

NEW YORK (AFP) - Software giant Oracle announced a 5.1 billion dollar hostile takeover offer for business software maker PeopleSoft, offering a six percent premium to PeopleSoft's current share price.

Oracle said would support PeopleSoft's previously announced acquisition of rival software maker J.D. Edwards for 1.7 billion dollars.

[Pro-Bush]

Oracle on the move...

[Huck]

Could someone post a real simple short explanation of a "Hostile" takeover?

[caa26]

Buying enough stock (Oracle) of the company (PeopleSoft) you plan to takeover to gain the voting power to change the members of the board. Once that is done Oracle has control of the company.

[Physicist]

That's when you offer a company for sale on the open market, and somebody actually buys it, sometimes paying you more money than you were asking, the bastards.

[Huck]

lol

[Huck]

thanks

[RedWhiteBlue]

In my limited understanding, a "hostile" takeover differs from a standard acquisition in the way that the company is bought. In a standard acquisition, one company buys the other by coming to an agreed to price with the full agreement of the leaders of company that is being bought (subject to the agreement of the stock holders, if any.) In a hostile takeover, the party that wants to buy another entity goes over the heads of that company's management and appeals directly to the stockholders by offering them a premium and tries to get them to vote for the sale.

[SauronOfMordor]

The difference between "hostile takeover" and "friendly merger/acquisition" has to do with whether senior management of the acquired company likes the idea.

Typically, in a hostile takeover, the old board and executives can expect to be replaced and shown the door (which is why management will try to resist/sabotage the takeover, even though the takeover would be good for the people they're supposed to be working for, the stockholders)

[Koblenz]

Hostile takeovers have been explained well by the others here: it's when a company buys enough stock to change the boards of directors, or it gets enough existing shareholders to vote for a change in the management that will be amenable to a takeover. The latter is called a proxy fight.

Hostile takeovers aren't done as much today as they were in the 1980s. Company managements frequently employ use of a "poison pill", which is a way of making it unattractive to be taken over without management's permission. One thing that can be done is that everyone gets a warrant to purchase 10 shares for every share they own. They can exercise this warrant and buy shares for $0.01 per share if someone acquires over 20% (but the 20% holder cannot), unless the board calls back the warrants. So if a company has say 15 million shares oustanding and the shares are trading for $5.00 per share. Someone buys 3 million shares for $5.00 each, or $15 million and has 20% of the company. Then the warrants can be exercised, and all of the sudden, there are an extra 90 million shares floating out there, for a total of 105 million shares, and the buyer owns 3 million, or less than 3%.

Another thing that companies do to prevent being taken over is to implement staggered boards. Say the board is 8 people, then only 3-3-2 will be up for reëlection each year. Takes a while to takeover the company.

Why are hostile takeovers good? Because they make companies more efficient. They are usually in the shareholders' best interests. Management and employees who are unproductive often get the shaft in such a takeover.

[Jack Black]

Larry's not serious. This is just a game to him. He competes with Peoplesoft and is casting dispersion on their products by saying he will discontinue them if he wins the takeover bid. But he is not serious, not at $16 a share. The stock was trading at $17.50 this morning. Who's gonna sell to Larry when you can sell to anyone else for more? You need to offer a large premium to win one of these. He's not, so he won't. He is smart enough to know what it would take to win the takeover, so he doesn't want to. This was a cheap PR stunt to harm the prospects of a major competitor, and it cost him zero. He's crafty all right.

[colorado tanker]

Theme music from Jaws . . . .

[ModernDayCato]

Wow...one code-bloated, ego stroked software company tries to take over another. Yawn.

[Revolting cat!]

NFG!

[Koblenz]

Yeah, this bid wasn't that serious, but it does indicate that there's consolidation. Look at PSFT taking over JDEC and then SSA Global Technolgoies acquisition of Baan. SSA GT has the added distinction of being a portfolio company of Cerberus, which is where Dan Quayle now works.

[wardaddy]

Sauron!

Hostile takeovers are not always good for shareholders by default....especially if the deal involves issuing shares of purchasing company for target company shares (or a hybrid new stock). Simple cash buyouts which are more rare are of course nice if they bring an inflated price to the target company shareholder.

I have experience with privately held company sales. The oddity is that the acquirer rarely runs the purchased company as well as before. I have seen a number of small companies (say 20-100 million) bought by large entities and then run in the ground and then sold back to the original owner for much less than was paid prior.

Does Ellison want something from PSFT or is he merely buying them off? I'm sorry, I haven't kept up with it and don't much care for Larry.

[wardaddy]

I should have read the thread....you answered my question to Sauron.

[big gray tabby]

You are exactly right, but he also exposes his own failure in penetrating the business applications industry. Why buy a competitor if you can run them out of the business?