Year in review: Oracle's merger madness

You wouldn't find more plot twists if you looked in a John Grisham novel.

Oracle's hostile bid to acquire PeopleSoft has kept investors, customers, analysts and scribes speculating and second-guessing, ever since the saga began in June.

Is Oracle serious about buying PeopleSoft? Or is its $7.25 billion bid merely a clever scheme to damage a growing rival? Will antitrust regulators give Oracle the green light? Or put a kibosh on the deal? Will Oracle raise its bid again? And how much is it willing to pay?

The ongoing battle has also raised deeper questions about the business software market and whether it's undergoing a fundamental shift toward fewer, more powerful competitors.

So far, answers have been slow in coming. At this point, Oracle appears genuinely intent on acquiring PeopleSoft. The antitrust question should be resolved in January, when the U.S. Department of Justice and the European Commission are expected to issue their decisions on the deal.

After that, the plot gets a little murky. Oracle says it's ready to wage a proxy fight and plans to nominate replacements for four PeopleSoft board seats in January, in advance of a spring election. But even if shareholders elect Oracle's slate, Oracle won't have majority control over the eight-seat board. Oracle also has to contend with a poison pill, a lawsuit charging it with unfair trade practices, and a coalition of 30 states poised to challenge the deal, if the Justice Department doesn't.

And like any good drama, this one has a host of colorful characters and subplots. There's the Morgan Stanley star analyst turned Oracle acquisitions mastermind, Chuck Phillips. Oracle Chief Executive Larry Ellison, everybody's favorite antagonist, has done his part to keep up the bad-guy image. Ellison said in initial interviews that he intended to shut down PeopleSoft and later joked about saving a bullet for PeopleSoft CEO Craig Conway. The bad blood between the rival chiefs actually goes back 10 years, when Conway, a former Oracle executive, was reportedly ousted from the company in a power struggle.

The town of Pleasanton, Calif., home to PeopleSoft headquarters, even took a stand against Oracle, which is based across the bay in Redwood Shores. In July, local businesses hung anti-Oracle signs in their windows, and the mayor of Pleasanton hit the streets in a Just Say No to Oracle campaign, led by PeopleSoft employees.

If nothing else, the Oracle-PeopleSoft brawl has provided some with a welcome distraction from the gloominess of the post-tulipomania information technology industry, still struggling to emerge from a three-year funk. The war in Iraq stalled business spending and didn't help matters.

Meanwhile, a widely circulated Harvard Business Review article bruised many an ego, proclaiming that IT just didn't matter anymore. But if there's one thing to count on, it's that Oracle always finds a way to keep things interesting.

--Alorie Gilbert