By William Trent, CFA of Stock Market Beat
It must have been a slow day at the office for this rumor to start up: Oracle to bid for SAP? – Computer Business Review
The oddly specific rumor had it that Oracle was preparing to offer 38.5 euros ($49.78) per SAP share. The speculation sent SAP shares up by 1.7% by midday, to 36.23 euros.
Although Oracle would dearly like to remove its closest competitor from the market, there is unlikely to be any substance to the speculation because the combination of the two enterprise application leaders would create a near-monopoly and would almost certainly be seen as breaching antitrust law in both the US and Europe.
Oracle�s acquisition of PeopleSoft three years ago sparked intense antitrust investigations and the company has since then acquired even more market share through its ongoing series of acquisitions.
Of course, when both sides want a deal to get done they will work through all of the issues that arise. But we think this is a deal that doesn�t want to get done. As BusinessWeek reported, there is a long history of bad blood between the firms and their executives:
[SAP CEO Hasso] Plattner�s passions have a way of getting the best of him. Take the famous mooning incident. In 1996, during a race off Hawaii�s Diamond Head, the mast of Plattner�s boat broke and one of his crewmen was injured. The way Plattner tells it, the shore crew of [Oracle CEO Larry] Ellison�s racing yacht, Sayonara, buzzed by in a dinghy, but, rather than stopping to help, they circled Morning Glory, taking videos. (Ellison denies his crew ignored a call for help.) �It was the most unsportsmanlike thing I�ve ever seen,� says Plattner. �I showed my behind to their video camera.�
Oracle had an intense rivalry with PeopleSoft that caused the deal to take nearly two years to complete. But as far as we know, no mooning was involved. We can only imagine the time it wo! uld take to close an Oracle buy of SAP.
The author may hold a position in the securities discussed. The author’s current holdings are as follows: Long: Union Pacific (UNP) put options; Air Products (APD) put options; Nasdaq 100 (QQQQ) put options; Bookham (BKHM; Ballard Power (BLDP); Syntax Brillian (BRLC); CMGI (CMGI); Genentech (DNA); Ion Media Networks (ION); Three Five Systems (TFS); IShares Japan (EWJ); StreetTracks Gold (GLD); Starbucks (SBUX); U.S. Oil Fund (USO); Plantronics (PLT) call options; Short: Starbucks (SBUX) call options; Landstar (LSTR) put options; Plantronics (PLT) put options
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