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PeopleSoft and Oracle Merger
Why was this a hostile takeover?
PeopleSoft strongly resisted the attempts of Oracle to buy out its stock, thus making the takeover hostile rather than friendly. "When the deal [merger] is unfriendly -- that is, when the target company does not want to be purchased -- it is always regarded as an acquisition." (Investopedia, 2005) PeopleSoft feared Oracle was merely seeking to buy PeopleSoft to acquire its lucrative customer base of application software. PeopleSoft felt Oracle was interested in supporting its company products, and also that its initial bids to buy its stock were inadequate. Financial industry analysts agreed it was unlikely that Oracle would look to have PeopleSoft develop much in the way of new technology and that a sizable amount of job cuts at PeopleSoft would be likely after the merger, as this was "a financial acquisition" where PeopleSoft's employees would be the losers, or the first to go as the two firms merged their operations. (LaMonica,...
Targets of mergers are usually smaller firms, with dispersed stockholdings, and a history of poor project choice and stock price performance. The target firms have under-performed in relation to their comparable competitors in terms of return on equity and stock returns, and have lower insider holdings than other firms in their peer group.
To avoid a takeover, increasing the rate of insider holdings, concentrating them in the hands of powerful investors, and improving the price and returns on investor's stocks in the short-term is thus ideal, an ideal that cannot always be realized. To suggest better project choices in the concrete terms of the industry, and also within a feasible financial strategy would also be helpful in creating…
Works Cited
"Discussion Issues and Derivations." (2005) The Stern School of Business. Chapter 9 Derivations. Retrieved 28 Oct 2005 at http://pages.stern.nyu.edu/~adamodar/New_Home_Page/AppldCF/derivn/ch9deriv.html
LaMonica, Paul. CNN Money (13 Dec 2004) "Finally Oracle to Buy PeopleSoft." Retrieved 28 Oct 2005 at http://money.cnn.com/2004/12/13/technology/oracle_peoplesoft/
'The Basics of Mergers and Acquisitions." (2005) Investopedia.com. Retrieved 28 Oct 2005 at http://www.investopedia.com/university/mergers/mergers1.asp
Types of Takeovers There are several consequences of whether a takeover is considered hostile or friendly. These consequences are more in the practical business realm than legal ones. Hostile takeovers are riskier for the acquirer than friendly ones. In a friendly takeover, the bidder will have a better chance to examine the company and its health. If the board is amicable to the situation, they will provide a full disclosure of
hostile takeovers unethical? Why ? 2. What strategies turbulent, high-Velocity markets? Do you think hostile takeovers are unethical? Why or why not? A hostile takeover, unlike a willing merger or acquisition, is a takeover of one company by another company that is openly resisted by the board of directors of the targeted firm (Hostile takeover definition, 2011, Investopedia). The problematic ethics of hostile takeovers can be seen in the recent war
Argo Vate/Hostil Takeover ArgoVate/Hostile Takeover Is this a hostile takeover? A hostile takeover is described commonly as "acquiring a firm despite the disapproval of, or open resistance from, its board of directors. The acquirer ('raider') usually takes the takeover offer direct to the target firm's stockholders (shareholders) or seeks their approval to remove the obstructing board members." (Business Dictionary, 2013) In this case the takeover is definitely hostile because the AgroVate management does
Rail Acquisition Why does CSX want to buy Conrail? How much should CSX be willing to pay for it? CSX wants to buy Conrail to acquire a larger portion of the Northeastern available rail lines as well as to increase its efficiency. CSX should be willing to pay slightly above the blended value, so about $90 per share. Why did CSX make a two-tiered offer? What effect does this structure have on the
S. Air hub in Phoenix is nearby the Delta hub in Salt Lake City. Typically, airlines seeking out acquisition targets seek to fill voids in hub locations rather than select airlines with lots of hubs close to their own. For example, critics of the U.S. Air offer state that United would have been a far better suitor for Delta because of the synergies between United's tran-Pacific routes and international networking
Finance-dominated proponents also maintain that boom economic periods generate a more varied divergence of valuations that fuel merger activity (Medlen 2007). In this regard, Medlen concludes that, "Taken collectively, these understandings may explain some of the merger activity in booms, but they involve certain asymmetries that undercut their explanatory power. High stock valuations allow stock to be utilized as currency and collateral for takeovers; yet stock booms also make