Oracle Directors Give Blessing To Shareholder Lawsuit Against Larry Ellison, Safra Catz (techcrunch.com) 14
An anonymous reader quotes a report from TechCrunch: Three years after closing a $9.3 billion deal to acquire NetSuite, several Oracle board members have written an extraordinary letter to the Delaware Court, approving a shareholder lawsuit against company executives Larry Ellison and Safra Catz over the 2016 deal. Reuters broke this story. According to Reuters' Alison Frankel, three board members, including former U.S. Defense Secretary Leon Panetta, sent a letter on August 15th to Sam Glasscock III, vice chancellor for the Court of the Chancery in Georgetown, Delaware, approving the suit as members of a special board of directors entity known as the Special Litigation Committee.
The lawsuit is what is called in legal parlance a derivative suit. According to the site Justia, this type of suit is filed in cases like this. "Since shareholders are generally allowed to file a lawsuit in the event that a corporation has refused to file one on its own behalf, many derivative suits are brought against a particular officer or director of the corporation for breach of contract or breach of fiduciary duty," the Justia site explained. The letter went on to say there was an attempt to settle this suit, which was originally launched in 2017, through negotiation outside of court, but when that attempt failed, the directors wrote this letter to the court stating that the suit should be allowed to proceed. As Frankel wrote in her article, the lawsuit, which was originally filed by the Firemen's Retirement System of St. Louis, could be worth billions. The report notes that Oracle was struggling to find its cloud footing in 2016, so it's "believed that by buying an established SaaS player like NetSuite, it could begin to build out its cloud business much faster than trying to develop something like it internally."
The Oracle letter can be found here.
The lawsuit is what is called in legal parlance a derivative suit. According to the site Justia, this type of suit is filed in cases like this. "Since shareholders are generally allowed to file a lawsuit in the event that a corporation has refused to file one on its own behalf, many derivative suits are brought against a particular officer or director of the corporation for breach of contract or breach of fiduciary duty," the Justia site explained. The letter went on to say there was an attempt to settle this suit, which was originally launched in 2017, through negotiation outside of court, but when that attempt failed, the directors wrote this letter to the court stating that the suit should be allowed to proceed. As Frankel wrote in her article, the lawsuit, which was originally filed by the Firemen's Retirement System of St. Louis, could be worth billions. The report notes that Oracle was struggling to find its cloud footing in 2016, so it's "believed that by buying an established SaaS player like NetSuite, it could begin to build out its cloud business much faster than trying to develop something like it internally."
The Oracle letter can be found here.
The samurai way ... ? (Score:2)
Let's see Ellison bushido his way out of this ...
Re:The samurai way ... ? (Score:5, Funny)
I think you misspelled bullshito way.
Re: (Score:2, Interesting)
Sure, they guy that built a multi-billion dollar tech giant over the course of the past 4 decades is going to be taken down by some activist shareholders because he is making long term decisions and not focusing on quarterly profits.
In other words, Ellison is avoiding the obvious trap that almost every other publicly traded company has fallen into (poor business practices to satisfy 'shareholder value'), so a couple of petty thugs are going to wrap the honor of the St Louis firemen around themselves and try
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Re:The samurai way ... ? (Score:5, Informative)
The crux of the lawsuit is:
"at the time of the NetSuite acquisition, that Larry Ellison was involved in setting up NetSuite in the late 1990s and was a major shareholder at the time of the deal."
and
"directors breached their duties when they approved a $9.3 billion acquisition of NetSuite – a company controlled by Oracle chair Larry Ellison – at a huge premium above NetSuite’s trading price. Shareholders alleged that directors sanctioned Ellison’s self-dealing - and also claimed that Oracle’s board members were too entwined with Ellison to be entrusted with the decision of whether the company should sue him and other directors over the NetSuite deal"
So Larry used company money to buyout his other company at a huge profit to himself at a cost to shareholders.
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So Larry used company money to buyout his other company at a huge profit to himself at a cost to shareholders.
Thanks, that is helpful to have it boiled down.
At the moment, Ellison owns roughly 28 per cent of Oracle, and I am guessing the past is similar. At the time he owned 40% of NetSuite. I am not seeing that overpaying for NetSuite is a big win for Ellison personally, even if there are many scenarios that do work out in his favor.
But I suppose whether Larry's actually raked in the cash is not the basis of the suit. The question is whether he was plausibly motivated to do a sub-par job at due diligence and wh
Re: (Score:2)
I would argue that Ellison took the entire risk of developing a web-based ERP suite aimed at the lower income tier of Oracle's customer based at a time that NOBODY was developing ERP suites for web deployment.
As a result he kept risk off of Oracle's ledger and was able to see some recompense for his taking the risk in the first place while delivering an able platform that easily competes with microsoft's web based erp suite.
fwiw, do you think that Steve Jobs received any money when NeXT OS was bought by App
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I would argue that Ellison took the entire risk of developing a web-based ERP suite aimed at the lower income tier of Oracle's customer based at a time that NOBODY was developing ERP suites for web deployment.
Nobody, including the plaintiff is arguing otherwise. The problem is that having done so, Ellison caused Oracle (and it's other stockholders) to pay him WELL above the (Wall) street value for his work.
In other words, the question is, had someone else created NetSuite, would Ellison have had Oracle pay that much for it or would he have tried for a better deal for Oracle?
As for Jobs, since he was not an employee of Apple when it bought Next nor was he a significant shareholder, there was no conflict of intere
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his own company into the ground like HP has.
Well, he did hire Mark Hurd as CEO so there some precedence.
Re: The samurai way ... ? (Score:1)
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So the shareholders... (Score:2)
So the shareholders are telling Larry Ellison to go fuck himself.
Unfortunately, I wouldn't be surprised if he married himself.
Larry and Oracle sue everything that moves (Score:2)
Live by lawsuits, die by lawsuits.