In the middle of its drawn-out hostile takeover bid for PeopleSoft, a clearer picture has begun to emerge of Oracle’s broader strategy to consolidate the business applications market. The new development will likely be of concern to customers of Siebel Systems, as well as PeopleSoft and JD Edwards.
Information Age has learnt that, just a few months before launching the PeopleSoft bid, Oracle CEO Larry Ellison sounded out his opposite number at customer relationship management (CRM) software giant Siebel with a merger proposal. The plan, put to Tom Siebel in a late 2002 phone call, involved Oracle spinning off its applications businesses and combining it with Siebel to form an entirely new company.
For Ellison, Siebel is arguably a better fit than PeopleSoft. In his plan, the Siebel CRM applications would replace the Oracle equivalent products, but the Oracle financials, manufacturing, supply chain management and other applications would live on as the larger part of the new business. In doing so, Oracle and Siebel would create a credible competitor to SAP, the clear market leader in enterprise applications.
But Siebel rejected the overtures and quickly strengthened its defences against any hostile takeover by introducing a ‘poison pill’ initiative just weeks later.
The revelation means that Ellison may again turn his attentions to the CRM vendor if the PeopleSoft bid fails. Certainly, Oracle executives have recently indicated they have other targets in mind.
The price would not be insubstantial. Although Siebel has stumbled in recent years, it is still the runaway leader in CRM software, with revenues of $1.6 billion in 2002. Given Siebel’s current market capitalisation, Oracle would have to offer between $5 billion and $6 billion to just to stimulate Siebel shareholders’ interest in such a merger.