Last month I posted about a New York Times article in which Larry Ellison touted Oracle’s acquisition strategy. He wondered why more companies didn’t follow in his footsteps by pursuing hostile takeovers.
Now, Microsoft has made an announcement which Ellison will surely be pleased with (according to his own professed strategies anyway). Microsoft CEO Steve Ballmer gave Jerry Yang and the Yahoo! management team this ultimatum Saturday morning: unless you agree to a deal within the next three weeks, we will go hostile and take the bid to a proxy fight.
Analysts are now comparing Ballmer’s words to Ellison’s five years ago, when Oracle issued its hostile bid to PeopleSoft. In Market Watch analyst Therese Poletti’s article, Yahoo seems headed the way of PeopleSoft, she compares Yang’s spiteful attitude to that of PeopleSoft head Craig Conway:
“[Such an attitude] is a dangerous position for the well-known Web pioneer. Conway lost his job when — in the heat of the merger battle — he made untruthful statements about his company’s business to analysts. Conway later admitted in a deposition that those statements were ‘absolutely not true’ and that he was ‘promoting, promoting, promoting.’
The same could be said about Yahoo. In March, Yahoo released a presentation to investors with what many have since described as unrealistic expectations and forecasts…”
Although Ellison’s bid for PeopleSoft was ultimately successful, this acquisition was a prolonged, two-year process, much of which took place in court and resulted in the falling of Oracle stock prices and PeopleSoft sales.
The damage was done on both sides, but Oracle came out the victor. And Poletti thinks Oracle’s success is indicative of that of similar corporations:
“The software giant’s track record has suggested that companies with deep pockets and resolve eventually get what they want regardless of the preferences of their adversaries.”
What do you think– Is Yang digging himself into a deeper hole by not giving in? Is his battle simply a losing one, whose fate is bound to mirror those of companies bought out by Oracle? If you were in Yang’s position, what would you do?