Oracle continues buying spree
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by Kate Gibson and Bill McConnell
TheDeal.com
16, Nov 2005
Oracle Corp. is not a company to let a few minor annoyances, such as a federal antitrust review of its purchase of Siebel Systems Inc. or the departure of its chief financial officer after a mere five months on the job, distract it from the important business of making acquisitions.
Spurred on by CEO Larry Ellison, the Redwood Shores, Calif., business software giant was at it again Wednesday, Nov. 16, unveiling deals for two privately held security software companies — Thor Technologies Inc. and OctetString Inc. — for undisclosed terms. The transactions come less than three months after Oracle agreed to buy Siebel, a maker of customer management software, for $5.85 billion in a purchase the Department of Justice cleared Wednesday.
Wednesday's acquisitions by Oracle also come eight months after the company first signaled its intent to strengthen its "identity management" software offering by purchasing software vendor Oblix Inc., also for an undisclosed sum. The three purchases, intended to help Oracle's enterprise customers protect sensitive information, are part of a collection of niche plays by a company that remains in the early stages of digesting Siebel and that by many accounts, is still integrating PeopleSoft Inc., which it bought for $10.6 billion.
In October, Oracle also bought Innobase Oy, a privately held Finnish open-source database specialist, while in September it agreed to purchase logistics software maker G-Log, expanding its portfolio of supply chain software. Terms in both deals were undisclosed.
Given Oracle's strategy of selling packages of integrated product "suites," the company is certain to continue its pursuit of vendors of application and infrastructure, analysts said.
Yet the company is paying a price in terms of its perceived value on Wall Street, with shares of Oracle losing about 8% of their value since the beginning of the year. The lack of investor enthusiasm reflects the company's stagnant organic growth and "concern over what they'll acquire next," one analyst said.
By contrast, getting government to buy Siebel after the Justice Department last month expanded its probe into the deal, is a boon for Oracle. Although such "second requests" for information are standard in big mergers, extending the review beyond the obligatory 30-day waiting period under the Hart-Scott-Rodino Act proved politically controversial and prompted a handful of senators to demand an explanation from the acting assistant attorney general for antitrust, Thomas Barnett, whose nomination to be permanently installed in the job awaits Senate confirmation.
DOJ's decision to issue a second request raised concerns among backers of the Siebel deal spooked by the agency's 2004 court battle to block Oracle's acquisition of PeopleSoft. The feds ultimately lost their bid to stop the merger after a seven-month legal fight that cost both sides hundreds of millions of dollars in court costs.
But soon after the second phase of the Siebel investigation was under way, Justice Department lawyers decided the deal posed little harm to competition in the market for customer relationship management software, the market segment Siebel dominates and in which Oracle is a key competitor.
"We did not hear a lot of concerns from customers," said Renata Hesse, chief of the networks and technology section of DOJ's Antitrust Division. "We looked at the CRM market and found it much less concentrated. There are a lot of players, and there are a lot of people doing CRM in-house. We came up with a very different picture than what we saw when we were doing the PeopleSoft merger."
The latest deal in Oracle's seemingly endless buying spree follows the departure of Greg Maffei, a veteran Microsoft Corp. executive who joined Oracle in June only to depart amid talk of personality clashes with other executives.
Maffei, who left Oracle to become CFO of cable giant Liberty Media Corp., is in line to become chief executive of the Englewood, Colo., cable company in mid-2006. |
