Bring out the big guns
Since Oracle (ORCL) launched its $6.3 billion hostile takeover for rival PeopleSoft (PSFT) last month, most of the focus has been on their warring CEOs — Oracle's Larry Ellison, who is pursuing the deal, and former protégé Craig Conway of PeopleSoft, who's resisting it.
But the outcome may well be determined by a cadre of high-priced hired guns who jump from merger to merger.
In PeopleSoft's corner, there's attorney Gary Reback, who led Netscape Communications' antitrust tussle against Microsoft, an Oracle rival. There's also PR power broker Joele Frank, who represented Walter Hewlett in his unsuccessful bid to block Hewlett-Packard's $20 billion merger with Compaq Computer.
On Oracle's side, there's the attorney who led the Justice Department's antitrust division under President George H.W. Bush and a former chairman of the Federal Trade Commission.
"It's like wrestling, where combatants trash talk (about) each another but understand it's just a business thing," says compensation expert Graef Crystal. He estimates top advisers make at least $500 an hour. "They're thick-skinned people who are friends in the end. That's because they're all winning big fees."
Feels like a reunion
In the field of high-stakes tech mergers and acquisitions, those with expertise are hot commodities. "There's a reason you see the same names attached to big tech deals — it's a small universe," says Charles Elson, director of the University of Delaware's center for corporate governance.
Indeed, several experts retained by PeopleSoft say it sometimes feels like a reunion when they huddle on strategy.
Reback's eight-page letter to the Justice Department on Aug. 12, 1996, persuaded prosecutors to investigate Microsoft's tactics in its browser war with Netscape. That led to the five-year antitrust suit against Microsoft. Reback also assisted Justice's challenge of Microsoft's proposed purchase of Intuit in 1995, which Microsoft eventually withdrew.
When Oracle announced its takeover bid, Silicon Valley attorney Reback, who spent the past three years as an entrepreneur, was quickly on the phone with Anne Jordan, PeopleSoft's general counsel. "I told her, 'This looks familiar,' " Reback says, drawing comparisons between Microsoft's strategies and Oracle's. A few days later, he was on board.
He claims Oracle, No. 1 in database software, is buying PeopleSoft to kill it and force 40% of PeopleSoft's customers, who use database products from IBM and Microsoft, to switch to Oracle. Oracle denies the charge.
Frank, meanwhile, has a long history with Ellison. She assisted Apple Computer during Ellison's abortive campaign to buy Apple in 1997.
When Oracle launched its initial bid for PeopleSoft on June 6, Frank burned the phone lines to join its defense team — and she did, by the end of the day.
"She's the Jewish mother of M&A deals," says Reback, who worked with Frank when Hasbro spurned a 1997 merger with Mattel.
Most recently, Frank, who declined to be interviewed, was a key strategist behind Walter Hewlett's quixotic quest to derail H-P's acquisition of Compaq last year.
Through an aggressive campaign of news leaks and advertisements, Frank's firm nearly toppled the biggest merger in tech history.
Now Frank finds herself plotting and joking with the same bankers she competed with on the H-P/Compaq merger — Goldman Sachs and Citigroup.
As quickly as tech's movers and shakers were assembled in PeopleSoft's defense, Oracle lined up its own heavy hitters.
Oracle Vice President Ken Glueck says he has hired about a dozen lawyers, bankers and economists.
Heading the team is law firm Howry Simon Arnold & White, which represented ScanSoft and Reuters in their respective takeovers of SpeechWorks International and Bridge Information Systems.
One of its partners, James Rill, 71, served under President Bush as head of the Justice Department antitrust division from 1989 to 1992. Jim Miller, 60, an economist at the firm, was FTC chairman from 1981 to 1985 under President Reagan.
"Gary Reback is fighting the last war against the wrong enemy," Rill said in a phone interview. "The parallel with Microsoft just ain't there. Oracle doesn't have a monopoly in the database market."
In the middle, this time, is famed valley attorney Larry Sonsini, 62, CEO of Wilson Sonsini Goodrich & Rosati.
He represents J.D. Edwards in its $1.75 billion proposed merger with PeopleSoft. Sonsini was Reback's boss during Netscape's clash with Microsoft, and he was H-P's lead attorney during its merger battle.
"In these high-profile M&A deals, you get a lot of the same people involved — me, Gary, Joele," he says. "That's the nature of the business."
Merger experts say there is more at stake than just the future of Oracle and PeopleSoft.
"This could set the tone for reputations and business in the (tech) M&A field for years," says Ken Marlin. "It's all about both sides making strong, clear messages to shareholders."