Oracle makes surprise bid for PeopleSoft
Published: 06 Jun 2003 13:19 BST
Oracle on Friday announced a surprise $5.1bn takeover bid for enterprise software maker PeopleSoft, only a few days after PeopleSoft said it was acquiring rival J.D. Edwards for $1.7bn.
Oracle is offering $16 per share for each share of PeopleSoft, a roughly 6 percent premium over PeopleSoft's closing price Thursday of $15.11.
A PeopleSoft representative said the company had no immediate comment.
Oracle said if it completes the acquisition of PeopleSoft, it would "review whether, and on what terms" it would support the J.D. Edwards deal.
"The acquisition of PeopleSoft will immediately make Oracle an even more profitable and competitive company," Oracle CEO Larry Ellison said in a press release. "Although we will not be actively selling PeopleSoft products to new customers, we will provide enhanced support for all PeopleSoft products. Furthermore we will be incorporating the advanced features from the PeopleSoft products into future versions of the advanced Oracle eBusiness Suite," the CEO said.
Ellison said in a conference call that PeopleSoft CEO Craig Conway approached him about a year ago "about combining the PeopleSoft application business with the Oracle application business. At that time, a year ago, we were unable to agree on structure."
The Oracle chief also said that his company "continued to follow PeopleSoft closely" and "thinks the time is right to offer shareholders an alternative plan" to what PeopleSoft's management has presented.
Earlier this week, analysts said the proposed combination of Peoplesoft and J.D. Edwards could increase competitive pressures on Oracle and enterprise resource planning (ERP) software market leader SAP.
Oracle, which leads the market for database software, has for years struggled to grow its application software business. Despite those efforts, the bulk of Oracle's revenue still comes from database software. Forrester Research analyst Laurie Orlov noted in a report this week that the company's application software business has declined to 26 percent of Oracle's overall revenue.
A representative for J.D. Edwards did not have an immediate comment on the Oracle offer. "The details of tender offer have not been revealed to us. Once they are, we will have additional comment," said spokesman Victor Chayet. "There is a definitive agreement between J.D. Edwards and PeopleSoft. The details of that agreement are known only to those two parties."
Shares of Peoplesoft rose more than 20 percent, to $18.34, in premarket trading. Oracle shares climbed nearly 3 percent, to $13.75.
The Oracle announcement, coupled with the Peoplesoft and J.D. Edwards deal announced on Monday, comes after a flurry of consolidation in the normally staid enterprise software market. Invensys on Tuesday said it had sold Baan, the financially troubled software maker, for $135m to a group of investors.
Separately on Friday, Oracle said that it expected to meet or exceed consensus estimates for its fourth fiscal quarter. The company said it should post earnings per share of 14 cents to 15 cents.
Oracle is the world's second largest software maker, posting sales of $9.7bn in 2002. The combination of PeopleSoft and J.D. Edwards would create a company with annual revenue of $2.8bn.
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