Takeovers the Larry Ellison Way
Mar 11th, 2008 by Colin Beasty

I don’t read Andrew Ross Sorkin that often, as I spend most my time browsing the Wall Street Journal and not the N.Y. Times, but his article in today’s Times blaming Larry Ellison for all the hostility in
Sorkin, among other things, states:
That is until Mr. Ellison decided about four years ago to go Rambo on this high-tech province of button-downs and khakis with a hostile $10.3 billion bid for PeopleSoft. At first, the bid was considered barbaric…I had sought out Mr. Ellison, in part, because if there’s one person responsible for the current run of hostile takeovers in Silicon Valley — Microsoft’s $44.6 billion bid for Yahoo and Electronic Arts’ $2 billion offer for Take-Two Interactive — it may be him. He not only made it acceptable to pursue hostile deals, he proved they could work — more than once. He just sealed a hostile $8.5 billion acquisition of rival BEA Systems in January.
There’s no disputing Oracle’s purchase of PeopleSoft was hostile, but taken in that context, when did Microsoft’s bid for acquiring Yahoo! become hostile? Microsoft made a bid, Yahoo! rejected it, and like any smart company is now shopping itself to potential suitors in an attempt to get shareholders the most bang for their buck while Microsoft drafts a new bid. While certainly not best buds, I wouldn’t term the companies as “hostile.”
Nor would I term Oracle’s purchase of BEA Systems hostile as well. BEA was a struggling middleware provider going nowhere fast. But therein is the common dominator among all these purchases, and the acquisition legacy that Ellison is truly leaving: purchasing dead or dying product lines and/or fading vendors into a second-place position within the market.
I’m not a big proponent of acquiring software technology, or agree with Ellison’s argument that there should be no “stigma to buying something rather than building it yourself.” While purchasing complementary product lines has its time and place, it’s what’s made Oracle into the cybernetic mess of people and products that has become Ellison’s empire, and one reason why SAP is still leading the market in nearly all categories. There’s still something to be said about growing and developing a software solution organically by taking into account the very best that both your company, and its customers, have to offer.


