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In The News

The principals of M&A are quoted regularly and frequently in publications ranging from Business Week and Forbes to the Wall Street Journal, the New York Times, New York Post, Los Angeles Times, and other major publications worldwide. M&A has been the subject of interviews on business-radio and television programs including the Fox Business News, CBS MarketWatch, The TV, Yahoo! Finance TV, Sirius XM Radio, BBC-Worldwide and CNBC. Below are links to a sample of articles in which M&A has been quoted:

Justice sets up a showdown

February 2004

Justice sets up a showdown

Oracle's takeover doomed, experts predict

Carrie Kirby, Chronicle Staff Writer

Thursday, February 12, 2004

With the Department of Justice staff recommending against Oracle's hostile takeover of PeopleSoft Inc. on antitrust grounds, the database giant faces a tough road if it continues to push the merger, experts say.

Yet it's a road that Oracle founder and Chief Executive Officer Larry Ellison, a notorious daredevil, seems determined to take. Oracle showed no signs of backing down Wednesday from the $9.4 billion bid, despite the growing perception that the deal is dead. One analyst described the merger as "a boxer who has hit the canvas -- and the referee has begun a steady count to 10."

The Redwood City company is holding on to the fact that the Justice Department's top officials, who are political appointees, sometimes go against the recommendations of their staff. In a statement Tuesday, Oracle lawyer James Rill said he experienced several such instances in his own tenure as assistant attorney general for antitrust in the first Bush administration.

Oracle, which has already provided the Justice Department staff with executive depositions and reams of information, will now get the chance to make its presentation to Assistant Attorney General R. Hewitt Pate, say those familiar with the process.

But it's extremely unlikely that Pate will go against the recommendation in this case, said Richard Gilbert, who served as deputy assistant attorney general for antitrust in the Clinton administration.

"The deck is now really stacked against Oracle," said Gilbert, who is chairman of the Economics Department at UC Berkeley. Gilbert recalls that out of the nearly 100 cases he worked on, there were about five instances in which the Department of Justice's final decision differed from the staff recommendation.

Those cases "were generally smaller deals," he said, while with Oracle, "you have months and months of depositions and analysis. I can't remember anything of this magnitude where the decision was reversed by the front office. "

Department of Justice spokeswoman Gina Talamona said statistics have not been recorded on how often the agency's decisions have diverged from the staff opinion over the years.

The news that Justice Department lawyers oppose the deal is the latest and biggest blow to Ellison's eight-month quest to buy PeopleSoft in an offer that has been vehemently opposed by the Pleasanton company's leadership. From the beginning, the struggle was acrimonious, with Ellison and his former employee, PeopleSoft Chief Executive Officer and President Craig Conway, trading barbs via the media.

Battle for shareholders

Aside from the regulatory issue, the companies are engaged in a battle for the approval of shareholders, who must decide whether to accept Oracle's $26 per share offer. Shareholders were also to vote on a slate of directors nominated by Oracle at PeopleSoft's annual meeting March 25.

If the Department of Justice sues to block the merger, its final decision is expected by March 2, it's unclear whether the proxy battle will proceed.

Gary Reback, PeopleSoft's antitrust attorney, said he is confident that the Justice Department will challenge the deal.

"This is not a gray-area case. There isn't anybody who would clear this," he said.

The Justice Department's decision probably hinges on the definition of the market for business software in which Oracle and PeopleSoft compete. Oracle sees many players in that market, including Microsoft Corp., which now only sells low-end business systems but might move up to selling to larger companies. Another likely Oracle defense is that Oracle and PeopleSoft combined would still not be the No. 1 seller of business software -- Germany's SAP would still hold that position.

PeopleSoft, on the other hand, is likely to argue that there are only three companies -- itself, Oracle and SAP -- that provide the full suites of the powerful business software that large companies and organizations need to run their financial, human resources, customer tracking and supply chain management. Reducing that to two choices would be harmful to consumers, the argument goes.

No political pressure

Pate and the Justice Department's other top officials were appointed by President Bush. While Republican administrations are less likely to block mergers than Democratic ones, political pressure does not come into play on individual decisions, UC Berkeley's Gilbert said.

"It would be very, very surprising if they made a decision on political grounds here," he said.

Typically, regulators and companies both try to avoid ending up in court. The government often negotiates with companies whose mergers it seeks to block, sometimes agreeing to allow the transaction if one or more lines of business are sold off.

In this case, it's unclear if there are any negotiable remedies that would allow the merger to take place. The Justice Department's Talamona declined to comment on the investigation except to say that it is continuing.

The hostile nature of this deal may complicate any such negotiations, said Ken Marlin, managing partner at New York m&a consulting firm Marlin & Associates.

When sued by the Justice Department, companies often drop their merger plans rather than go to court. Of the 320 mergers the agency said it would block between 1991 and 2002, the companies involved either restructured or abandoned their transactions 61 percent of the time, according to department statistics.

Oracle may be one of the companies that does fight the government to the finish. Ellison has said he would recommend to his company's board members that they do so.

If so, Ellison, known for relishing the cutthroat competition of both sailing races and the software industry, may be in for the fight of his life.

A bloody battle

Hillard Sterling, a Chicago lawyer with the firm Much Shelist, described courtroom merger battles as "lengthy, expensive and frustrating for all involved."

In the mid-1990s, Sterling took on the Federal Trade Commission, fighting for his clients Staples and Office Depot, which wanted to merge.

"It was a bloody, protracted battle," and one that he eventually lost, Sterling recalled. Oracle could spend tens of millions of dollars on such a case, he estimated.

The odds for companies suing the government over mergers are not encouraging. The Department of Justice lost just seven of 129 merger cases it fought over 10 years.

In addition, a trial would likely result in all kinds of internal Oracle documents being released to the public, a potentially embarrassing and damaging prospect.

That makes some wonder if, despite Ellison's game face, the company may soon concede.

"Oracle is claiming that it's going to fight on, but we expect they'll abandon their bid," said Tom Burnett, president of Merger Insight, an affiliate of the New York research and brokerage firm Wall Street Access.

Shares of Oracle rose 2.3 percent on the news to close at $13.70. PeopleSoft shares fell 0.9 percent to close at $21.50. Analysts said market reaction to the deal was mild because many investors already doubted that the transaction would go through.

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