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All eyes on Oracle's (Nasdaq: ORCL) US$6.3 billion bid for PeopleSoft have turned toward Washington, D.C., where the U.S. Department of Justice (DOJ) could crimp the hostile takeover attempt by raising regulatory concerns.
Today is the deadline for the DOJ to issue a second request for information about implications of the takeover.
Analysts have called stiff DOJ opposition a potential deal-breaker, but Oracle has said it expects the request. The company reportedly is preparing a response in which it will argue that the DOJ should expand its inquiry to include other software companies and mergers, especially the PeopleSoft takeover of J.D. Edwards, which is already under way.
"We remain very optimistic that DOJ will conclude that this transaction is not anti-competitive and that we will complete the transaction in a timely manner," Oracle spokesperson Jim Finn said, saying it is both likely and logical that the bid's "high-profile nature" will result in a so-called second request for information.
However, legal experts say filling a second request typically is a laborious task that requires extensive information about the businesses of both the acquisition target and the parent company and that can take months to complete.
Antitrust Worries
Pleasanton, California-based PeopleSoft's board of directors, which objects to a takeover by Oracle, has cited antitrust concerns twice as it urged shareholders to reject Oracle's cash offer to buy PeopleSoft stock. PeopleSoft worries that regulatory hurdles, even if they can be cleared, will slow the merger enough to cause customers to flee to third-party competitors like SAP (NYSE: SAP) and Siebel.
"The bottom line is that no one knows how all this is going to come out," Gartner (NYSE: IT) analyst Betsy Burton told the E-Commerce Times. "The regulators, the lawsuits and whether shareholders will tender it all adds up to a lot of turmoil."
Closing the Books
Timing plays a key role, Burton added. Today marks the end of the second quarter for many public companies, including PeopleSoft, which reportedly has been trying to convince customers to close deals in order to strengthen its results.
Customers have become skittish, meanwhile, with one public agency in California reportedly delaying a $100 million software implementation until the uncertainty is resolved.
"The quarterly results are important because the shareholders are trying to judge what their best option is going to be," Burton said.
Playing Mean
Contentious from the outset, the merger dispute has remained heated and downright nasty at times. A host of legal actions are pending, including claims by J.D. Edwards that Oracle is trying to torpedo its merger with PeopleSoft and attempts by Oracle to have a PeopleSoft "poison pill" measure, designed to thwart hostile takeovers, deemed null and void.
Last week, Oracle employees were told to help educate customers and potential customers about what executives described as PeopleSoft "lies" about the status of the two mergers.
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