European Commission regulators have cleared the way for Oracle’s bid for PeopleSoft to go ahead. This is the second and final regulatory hurdle Oracle has cleared in pursuit of its hostile bid, and from an antitrust perspective the company is now free to move since no conditions were attached to the ruling.
The EC concluded that there was insufficient evidence that Oracle’s acquisition of PeopleSoft would have a negative effect on competition in the business applications area. The deal was cleared despite indications earlier in the investigation that it would be blocked, it was reportedly cleared because Commission lawyers did not think a decision to oppose it would withstand an appeal by Oracle in the European Court. Oracle won just such an appeal in the US when the Department of Justice opposed the move.
The US investigation and subsequent court case appear to have influenced the European decision because in a statement the EC said it had cooperated with the regulators handling the parallel US case, and said it has also taken into account evidence from the trial.
What is normally a five-month investigation expanded to a year because two halts were called while fresh information was gathered. The latest was submitted within the last month and was believed to have included information showing that contracts were contested by a large enough number of vendors to indicate competition in the market.
In a statement PeopleSoft said it would review the implications of the decision and reiterated that it had rejected all previous offers, including the current $21 per share offer, because the offers were inadequate and did not reflect PeopleSoft’s real value.
The whole bid situation has undergone major change over the last month, starting with the DoJ announcing that it would not oppose the court ruling that threw out its objections to the bid, the sacking of PeopleSoft’s vehemently anti-Oracle CEO Craig Conway, and the US court case Oracle brought to try and have PeopleSoft’s anti-takeover measures dismantled, which turned into a forum for negotiation as much as a legal tussle.
This decision significantly increases the odds that Oracle will succeed but does not mean the brinkmanship will be any the less. Oracle spent its trial time trying to downplay PeopleSoft and threatening to reduce the bid price on the grounds that the $21 per share price tag reflected PeopleSoft’s past value.
A senior PeopleSoft executive who gave evidence at the trial suggested that the company might entertain an offer if it was financially sensible and a deal could be struck quickly, but the company then went on to play up its on-target quarterly results. Furthermore, PeopleSoft CEO Dave Duffield has stressed that he is not there to offer up the company to Oracle and is committed to keeping it independent.