The battle between Oracle and PeopleSoft has driven those who study capitalism into their respective corners.
Those who like the raw-meat variety of capitalism are finding much to admire in Oracle’s hostile bid for PeopleSoft, a big rival in the software business.
There is the theatre: two sworn enemies slugging each other senseless. But there are also the growing signs that Oracle’s bid may come to mark a departure from the previous rules of business in America. The business culture of the 1990s—defined, above all, by the consensual business matings that spawned the greatest merger boom in history—now looks too cosy.
As agitation for system-wide reform continues, Oracle’s bid is the latest evidence that managers, boards and shareholders have begun to play a less friendly game. Nobody knows what the new rules will look like. This battle may provide the first real clues.
On June 2nd, PeopleSoft said that it would buy J.D. Edwards, a smaller rival. Four days later, Oracle announced its own bid for PeopleSoft, and invited the firm’s board to talk. Furious that his own plans had been endangered, PeopleSoft’s boss, Craig Conway, called Oracle’s offer “diabolical”, and its boss, Larry Ellison, a “sociopath.”
Moreover, said Mr Conway, he “could imagine no price nor combination of price and other conditions to recommend accepting the offer”. On June 12th, PeopleSoft turned Oracle down. It said there was a big risk that antitrust authorities would block the merger; that uncertainty, plus Oracle’s stated intention to discontinue PeopleSoft’s products, would damage the company; and that Mr Ellison’s $16 a share offer was too low.