Big Finish to a Quiet Year



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January 15, 2005 —  (Page 1 of 3)
Just when it looked as if 2004 would go down as one of the quietest years ever for mergers in the software industry, Oracle finally locked down its US$10.3 billion acquisition of enterprise applications rival PeopleSoft, ending an 18-month struggle and marking one of the largest takeovers in industry history.

Oracle also inherits the customer base from JD Edwards, which was acquired earlier by PeopleSoft, and joins SAP as the two largest remaining players in the ERP/CRM application space. Left unsaid for now is the status of an agreement PeopleSoft reached in 2004 with IBM to integrate the two companies’ software; early indications from Oracle are that the company does not want to pursue that collaboration.

Three days after the Oracle deal was announced, security software maker Symantec announced it would buy data storage and recovery software company Veritas for US$13.5 billion. As the security software market is growing much faster than the data storage market, questions about the deal have arisen. Analyst Nitsan Hargil of Friedman, Billings, Ramsey & Co. was quoted as saying, “While we believe, longer term, that the acquisition of Veritas could make for an exciting company, we are concerned about the negative impact it will have on Symantec’s growth profile.” Hargil downgraded Symantec’s rating to “market perform” from “outperform.”

In the application development space, Serena’s US$380 million takeover of Merant resulted in the growth of Serena’s application life-cycle management offerings. That acquisition came on the heels of a 2003 buyout of TeamShare and bumped up Serena in class.

Also last year, Watchfire purchased Sanctum, giving the company an instant presence in the application vulnerability assessment market.

While M&A was slow, there was no dearth of activity in courtrooms around the world. Microsoft settled a long-running feud with Sun, agreeing to pay Sun US$1.6 billion and to work together for 10 years. This settled the second lawsuit between the two; the first, settled in 2001, apparently was not satisfactory to Sun. The case involved what Sun claimed was Microsoft’s improper use of Java technology. That ended with Microsoft paying Sun some $20 million and agreeing to phase out products with older Java implementations in them.




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