Corporate Governance

The Oracle acquisition of PeopleSoft

By Harvard Law School Program on Corporate Governance

Recently, in the Mergers, Acquisitions, and Split-Ups course here at Harvard Law School, which is co-taught by Vice Chancellor Leo Strine, Jr. and Professor Robert C. Clark, there was a panel discussion which focused on Oracle?s acquisition of PeopleSoft. The panel consisted of A. George “Skip” Battle, chairman of the PeopleSoft board’s Transaction Committee, Victor I. Lewkow, a partner based in the New York office of Cleary Gottlieb who focuses on public and private merger and acquisition transactions, and Professor Guhan Subramanian, the Joseph Flom Professor of Law and Business at the Harvard Law School and the Douglas Weaver Professor of Business Law at the Harvard Business School.

Skip began the discussion by outlining the competitive environment at the time of the bid. In particular, he focused on how sensitive the stock price is to software sales for companies like PeopleSoft. The importance of this relationship was reinforced by Victor, who noted that Oracle?s initial bid could have the potential to delay customer orders while the acquisition was finalized. Even if customers only delayed their orders by one or two quarters, PeopleSoft?s stock price could be cut by as much as 50%. Both panelists also discussed other issues, such as why a transaction committee had to be formed, and the relevance of anti-trust considerations. Guhan added to the discussion by outlining various bidding strategies, and by providing the context for Oracle?s initial low offer. Vice Chancellor Strine provided the perspective of the judge who heard Oracle?s request to compel PeopleSoft to rescind its ”poison pill” provision.

The video of the panel is available here.

Full post as published by The Harvard Law School Corporate Governance Blog on November 07, 2008 (boomark / email).