ELLISON HUNGRY FOR DEALS DESPITE CHOKING ON SHARE SALE

Global Finance, Oct 2005 by Platt, Gordon

UNITED STATES

September 12, 2005, was a redletter day for Lawrence J. Ellison, who has been Oracle's CEO since he co-founded the business-software company in 1977. Ellison was in the news twice that Monday morning. First, he reportedly agreed to pay $100 million to a charity of his choice to settle a shareholder lawsuit. According to the lawsuit, Ellison allegedly sold $900 million of shares in 2001 before news that Oracle would not meet its expected earnings target. While damages in such cases are typically paid directly to the company, under this unusual settlement, which needs the approval of Oracle's board, Ellison would make the payments to the charity in the name of Oracle over five years.

Also on September 12, Redwood Shores, California-based Oracle agreed to buy Siebel Systems, which makes software for customer relationship management, or CRM. The cash-and-stock deal was valued at $5.85 billion, or $3.61 billion net of Siebel's cash on hand of $2.24 billion.

"In a single step, Oracle becomes the number-one CRM applications company in the world," says Ellison, who is not known for understatement. Oracle, which has announced a total of nine acquisitions in 2005, is still hungry for more takeovers, Ellison says, although no major buys are likely until, the Siebel acquisition is fully digested. Analysts say acquisitions are the easiest way for large software companies to significantly increase their revenues in today's highly saturated markets. Siebel had long been considered a prime takeover target for Oracle. High-level talks between the two companies date from at least April, when Siebel ousted its then chief executive officer, J. Michael Lawrie, after he warned that Siebel's first-quarter results would be the worst in five years.

On June 1, 2005, Oracle's $10.3 billion hostile acquisition of PeopleSoft became final. PeopleSoft develops enterprise application software, which is used for CRM and human-resource management. That landmark acquisition had been challenged on antitrust grounds by the US Department of Justice, but in September 2004 a federal judge ruled in favor of Oracle's bid. -GP