PeopleSoft v. Oracle: Hostilities Involved in a Takeover
OMM 640 Business Ethics and Social Responsibility (MFF1226A)
Instructor – Ken Edick
The hostile takeover of PeopleSoft by Oracle was the results of a lengthy court battle that raised many issues. One issue in particular concerned anti-trust laws and their application to technology companies. The Department of Justice, in an attempt to block the takeover, argued that a merger of this nature would lessen competition and ultimately limit customer choice. An appellant court judge ruled that this case did not meet the criterion of an anti-trust breach and ruled in favor of Oracle. Never the less, many other factors
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“The unusual corporate takeover battle began in June 2003, when Oracle made the first of four hostile offers for PeopleSoft” (Lohr & Flynn, 2004, par. 14). Oracle’s chief executive and founder announced that he had no interest in PeopleSoft’s technology or products. His main concern was with switching the corporate customer base to Oracle’s competing software. Another unusual occurrence was attributed to Oracle’s determination to challenge the Department of Justice’s takeover injunction. Usually, in the world of high-technology businesses, instead of engaging in litigation a company will elect to abandon a planned deal if a government agency files suit against the proposed plan (Lorh & Flynn, 2004). Another oddity involving this case is the magnitude and vigor of the war that was ongoing between the heads of the two corporate giants. PeopleSoft’s stance was that the company would not be sold to Oracle under any circumstances with disregard of shareholders’ wishes. This pugnacious behavior was not common in Silicon Valley (Kirby, 2003).
What were the relevant conditions that needed to be considered by the PeopleSoft independent board of directors in determining if the sale of the company was in the best interest of the shareholders? Because the Chief Executive Officer of PeopleSoft was adamantly against the sale of the company to Oracle under any