US thinktank The Center for the Defense of Free Enterprise has described Oracle's attempt to take over PeopleSoft as "one more corporate scandal to unsettle an already shaken public."
In a letter to antitrust regulators, CDFE Executive Vice President Ron Arnold said Oracle's hostile takeover would harmshareholders, customers and the public. "If approved, CDFE believes Oracle's takeover would significantly reduce innovation and competition in the specialised business software market, not only driving up costs to customers and diluting shareholder value, but also creating one more corporate scandal to unsettle an already shaken public," he said.
The non-profit, non-partisan foundation, which focuses on defending the rights of citizens to participate in a free marketplace, called on the Justice Department to reject Oracle's proposed $6.3 billion offer for PeopleSoft arguing that PeopleSoft's customers and shareholders have voiced their opposition and it could result in businesses, governments and other organisations having to make expensive changes in order to use Oracle's software rather than their current PeopleSoft products
'PeopleSoft's customers and shareholders have voiced their opposition to Oracle's takeover, a serious consideration,' said Arnold. 'Second, from a public perception standpoint, a hostile takeover would allow Oracle (currently number two in the business software market) to eliminate one of its major competitors (PeopleSoft is number three). The public would be keenly aware of the reduced number of major software vendors from three to two, leaving Oracle and SAP AG of Germany (number one) as the remaining vendors in the large enterprise/government market .Put simply, this redrawn landscape would reduce customer choice and drive up costs. And the public would wonder how that promotes free enterprise.
'From a customer's standpoint, Oracle may well require businesses to make expensive changes in order to use Oracle rather than their current PeopleSoft products. CDFE has studied Oracle's public statements, and cannot determine whether Oracle will allow customers who have already purchased PeopleSoft products to continue using them rather than transition to Oracle goods.
'Further, consider the significant disruption to customers' day-to-day operations that could occur if Oracle were allowed to acquire PeopleSoft. Switching software and service arrangements takes time and resources away from a business or government's central mission, to say nothing of the disruption caused to relationships with their own customers and clients.
'From a shareholder standpoint, the Center feels that Oracle's hostile bid for PeopleSoft threatens shareholder value. First, Oracle's takeover plans and the prospect of lengthy regulatory review have already created uncertainty in the markets about PeopleSoft's future. Oracle's actions could erode the value of PeopleSoft stock in the weeks and months to come. '
He concluded by suggesting that Oracle's motives might not be as up front as they appear. "CDFE joins industry experts and independent analysts in questioning Oracle's motivation," he said. "Since hostile takeovers in the software industry are extremely rare, many suspect Oracle's ultimate goal may be to disrupt PeopleSoft's business and then walk away having wounded one of its major competitors and inflicted a terrible blow to PeopleSoft shareholders. "
Meanwhile Oracle CEO Larry Ellison will address the company's annual analyst day where there is speculation that he may increase the price he's prepared to pay for PeopleSoft.