Oracle could raise PeopleSoft price
Published: 25 Jun 2003 13:52 BST
Oracle chief executive Larry Ellison on Tuesday left the door open to raising the share price offer in its hostile takeover bid for competitor PeopleSoft.
Speaking at Oracle's AppsWorld customer conference in London, Ellison reiterated the company's intention to continue support for PeopleSoft customers and to make it "price neutral" for them to switch to Oracle's own line of business applications.
Ellison said that Oracle's $6.3bn (£3.79bn) cash tender to acquire PeopleSoft is "fully valued and very fair." PeopleSoft's board has consistently said Oracle's bid is too low. Asked whether Oracle would top its current offer, Ellison said, "Never say never."
The chief executive also disputed notions that his company is trying to acquire PeopleSoft to overcome weakness in its applications business. Analysts and people familiar with Oracle have said that the company needs to bolster its applications business in order to offset any slowdown in its core database software business.
Oracle earlier this month launched its hostile takeover bid to acquire PeopleSoft for $5.1bn shortly after PeopleSoft and business applications specialist J.D. Edwards announced their intent to merge. A combination of PeopleSoft and J.D. Edwards would displace Oracle as the No. 2 business software maker. Ellison said that his offer will make Oracle a more profitable and competitive company.
Oracle initially offered $16 per share for PeopleSoft. Last week, it raised the bid to $19.50 per share, or $6.3bn. PeopleSoft's board has rejected both offers.
Answering questions after his keynote speech at AppsWorld, Ellison said that the reasoning behind the company's bid for PeopleSoft has not been fully appreciated by industry analysts and the media.
Ellison rejected the idea that Oracle is on guard against slowing sales in its traditionally strong database business. Recent surveys, however, have shown that the company is losing share to IBM and is facing a tougher fight in the low end of the database market, where Microsoft and open-source alternatives are growing in popularity.
Oracle currently has the No. 2 position in the business applications business with an expected $2.6bn in revenue for 2003, behind SAP, which is expected to have $7.4bn in sales this year, according to AMR Research.
"We think the database business and the applications business are very closely related and that has not been widely recognised," said Ellison.
During his keynote discussion, Ellison said that Oracle's technical strategy of consolidating data in fewer databases, rather than scattering data in several places, makes finding business information in its e-business suite easier than in competing products.
Ellison said that if Oracle succeeds in taking over PeopleSoft, Oracle will no longer "actively market" PeopleSoft products or take out advertising for PeopleSoft products. But in an attempt to sell the company's takeover offer to wary PeopleSoft customers, he pledged to support PeopleSoft products "for many years to come" and to give customers the option of moving to comparable products from Oracle.
Ellison said the company has a "reasonable chance" to overtake SAP for the top spot in the applications business and said he expects Microsoft to continue to aggressively expand its presence in business applications. Even if Oracle succeeds in acquiring PeopleSoft, the company will still trail SAP by a wide margin, according to market share figures from AMR Research.
Separately on Tuesday, Oracle said it has dropped its objections to PeopleSoft making changes to its offer for J.D. Edwards. PeopleSoft's board had cited that objection as an obstacle to the two companies holding talks over Oracle's offer.
"We hope that with this waiver, PeopleSoft will finally agree to meet with us, as their shareholders are demanding," Jim Finn, an Oracle spokesperson, said in a statement issued on Tuesday morning.
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