There was a funny commentary on Oracle’s ongoing fight to take over PeopleSoft on CBS MarketWatch the other day, which asked the question of whether PeopleSoft could turn the tables and take over Oracle.
The column rightly pointed out that companies threatened with a hostile takeover have employed the so-called "Pac-Man Defence" in the past. It’s simple really – the company being pursued turns around and starts a hostile takeover of its pursuer, just like in the Pac-Man arcade game.
The only thing is, the Pac-Man Defence only works when the companies are of roughly equal size, or at least have about the same market cap. After all, it is tricky for a company to acquire another far larger than itself, and nigh on impossible if it doesn’t have the blessing of that larger company either.
With PeopleSoft’s market cap at $8.7bn at the time of writing, does it really have much chance of acquiring Oracle, whose market cap sits at around $66 billion? Of course there is no chance.
Still, you can’t really blame CBS: the story appeared just after the Thanksgiving holiday in the US, so it must have been a pretty slow news day. It’s not a bad strategy: next time we have a slow news day we might write a piece asking whether Salesforce.com might buy Siebel. Actually, thinking about it, that could really happen, as long as you make the possible time frame long enough – say, by 2020? Then just add a Gartner-style probability rating and you have a winning story: "Salesforce.com Could Acquire Siebel by 2020 (0.5 probability)." That has got to sell some newspapers!