By now Oracle’s play for PeopleSoft is fairly common knowledge – but if you missed it, suffice it to say that the company has offered $5.1 billion in cash to acquire PeopleSoft, which itself had just agreed to a $1.7 billion stock deal to buy fellow ERP vendor J.D. Edwards.

Besides the obvious competitive ramifications of an Oracle/PeopleSoft transaction (or anti-competitive ramifications, depending upon which side of the fence you’re on), our attention was captured by two items in particular: the timing of the Oracle announcement, and the likely entrance of a White Knight organization that will swoop in and “rescue” PeopleSoft from Oracle.

Is Timing Everything?
One of the most interesting aspects of the Oracle announcement has to do with its timing, as it came immediately after PeopleSoft announced its intention to acquire J.D. Edwards. Though Oracle Chairman and Chief Executive Larry Ellison was quoted by Reuters as saying, “What happened on Monday [the PeopleSoft/J.D. Edwards deal] absolutely triggered it,” the move seemingly has its roots in PeopleSoft-initiated conversations held last year with Oracle about possibly combining their business applications operations. Our questions, therefore, are “why now?” and “what does Oracle really hope to achieve?”

There are a couple of answers extant:

1. Oracle wants to improve its competitive situation by creating instability at PeopleSoft (which, for example, has to pay J.D. Edwards a breakup fee of 3.25% should that deal fall through), and among PeopleSoft customers.

 
2. Oracle is really after J.D. Edwards, and is hoping to scare PeopleSoft off by forcing it to concentrate on its own survival.

 
3. Oracle is signaling a strategic change of direction vis-à-vis mergers and acquisitions, which historically have not loomed large in its blueprints for growth.

 
4. Oracle actually does wish to acquire PeopleSoft, not so much as an addition to its own product line, but under the theory that “if you can’t beat ’em, kill ’em.”

Wanted: White Knight to Affect Rescue
This being the case, one wonders if the stage isn’t now set for a White Knight organization to come riding to PeopleSoft’s rescue by acquiring the company itself – and gaining guaranteed access to PeopleSoft’s customers in the process.

Sixteen months ago, a similar scenario played itself out when Adobe acquired Accelio (nee JetForm) in the wake of an unsolicited and unwelcome bid by OpenText to acquire the latter firm. That occurred in a different market space to be sure, but the dynamic was precisely the same, and Adobe today finds itself with ready access to a new group of customers to which to sell its core products. (How quickly it is penetrating those customers, however, is another question altogether!)

So who might PeopleSoft’s White Knight be? Here are just a few speculations, predicated on the assumptions that such a firm would have to be sufficiently large to digest a company the size of PeopleSoft, and have sufficient interest in obtaining or expanding its seat at the enterprise table to make the transaction worthwhile:

• Sun: seeking to push outward into applications from its legacy as a technology provider

• IBM: a regular visitor to the M&A well; possibly interested in hastening the Webification of ERP and positioning it as a flagship on-demand application

• HP: has a long history in the ERP arena and, especially in its post-Compaq configuration, with excellent credentials as a resource for related hardware and software

• SAP: says it doesn’t buy companies to get market share, but it has acquired selectively in the past (e.g., TopTier) and therefore may be “protesting too much”

• Siebel: probably too small, but stranger things have happened, and would move the company further into the core of the enterprise

• Microsoft: a “usual suspect” forever looking to establish a presence as a significant enterprise player

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