Behind the scenes of Oracle-Siebel

In the midst of a hostile takeover battle for PeopleSoft, database giant Oracle also was laying the groundwork for its eventual acquisition of Siebel.

According to a proxy filling this week with the US Securities and Exchange Commission, Oracle and Siebel were quietly discussing a potential merger in November 2003, about five months after Oracle made a hostile bid for PeopleSoft.

And while much of the enterprise software industry was focused on the publicly acrimonious PeopleSoft acquisition, the talks between Oracle and Siebel were not without their own back-room intrigue. Over the course of a two-year period, Oracle in June of 2005 dangled a potential buyout range of $11 to $12.60 a share, only to ultimately stand firm at $10.66 a share when an agreement was announced in September.

Siebel's serious search for a suitor began in June 2003, when it formed the "Perseus Group", a collection of outside legal and financial advisors, to find it a buyer or a strategic alliance.

Oracle and Siebel, which had held casual discussions in the past about a potential merger, according to the SEC filling, entered into more formal talks in November 2003. Several days before Thanksgiving, Siebel's chief financial officer, its chief technology officer and an executive vice-president met with Charles Phillips — then Oracle's executive vice-president of strategy partnerships and business development — to sign a nondisclosure agreement and discuss a merger.

"Ultimately, Oracle and Siebel Systems elected not to pursue such discussions, since Oracle was then pursuing the acquisition of PeopleSoft," according to the SEC filling. "From time to time following the November 2003 meeting, representatives of the two companies... contacted each other to discuss whether the parties should explore a business combination."

As previously reported, Oracle chief executive Larry Ellison noted in a 2004 videotaped deposition that Siebel's founder, Tom Siebel, had approached him about selling his company. That deposition was part of the Department of Justice's antitrust case against Oracle over its merger plans with PeopleSoft.

And this spring, when Siebel ousted its chief...

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