Back in 2004, Oracle placed a bid for PeopleSoft and eventually bought the company. Oracle struggled to purchase PeopleSoft for almost 18 months before they were finally able to acquire the company. The company was purchased for $10.3 billion, which breaks down to about $26.50 a share.
The journey wasn’t an easy one, and a lot of people wondered why the company was going to such great lengths to acquire the company in the first place. This question is something that was difficult to answer when the deal first began, but some answers are finally coming to light. It takes a keen eye and an understanding of business sense to see the full picture of the acquisition.
Most onlookers were confused when Oracle first placed a bid for PeopleSoft. It was a very surprising action when it was first announced, and many people began to speculate on what this meant for both companies. The most obvious answer to why Oracle wanted PeopleSoft is so that the company could grow and become stronger.
Many companies are struggling to remain relevant, and PeopleSoft had the right tools to survive the oncoming drought. Oracle is one of the biggest providers of database software, but they were lacking in the customer relationship management (CRM) domain. This is where PeopleSoft came into view and why Oracle wanted them so badly.
Another reason why Oracle wanted, or perhaps needed, PeopleSoft was to level the playing field against competitors. There were some initial talks of PeopleSoft trying to purchase J.D. Edwards, which would have put it ahead of Oracle and posed a very real threat to the company. On the other hand, Oracle would be able to expand the company, get new products, a bigger staff, and stay in the current position it is in if they bought out PeopleSoft. This meant that Oracle could expand its own business while preventing a rival company from growing at the same time. It made perfect business sense.
When Oracle decided to acquire PeopleSoft, it was also able to provide customers with a stronger support system and become their one-stop shop. PeopleSoft was the missing piece to the puzzle, and it helped give customers the resources they needed to start or maintain any business at a low cost. Oracle had trouble getting middle-tier companies on board with them before the acquisition, but PeopleSoft’s customer base and knowledge gave them a way into this market in order to expand.
Oracle needed PeopleSoft in order to become stronger and bigger than it already was, but it also wanted to give customers they services that they desperately needed. When one looks at the bigger picture, it’s easy to understand why the buyout occurred and why Oracle felt that is was so necessary. With this acquisition, Oracle was able to get a bigger piece of the market and continue to expand while eliminating any threats. Regardless what people think about the approach that was taken, it’s clear that Oracle knew what it was doing and took the best course of action for everyone.