Oracle ups ante in bid for PeopleSoft

Offer raised to $19.50 (U.S.) but deal still not a sure thing

Oracle Corp. has increased its bid to buy rival PeopleSoft Inc. to $19.50 (all figures U.S.) per share, bringing the total value of the bid to about $6.3 billion.

Oracle said this is a 29 per cent premium over PeopleSoft’s stock price prior to the announcement of Oracle’s bid on June 6, 2003. Oracle's original bid was $16 per share, or a total of $5.1 billion.

Oracle chairman and CEO Larry Ellison said the company has been speaking with the holders of a majority of PeopleSoft shares.

“Many of those shareholders indicated the prices at which they would tender their shares,” said Ellison. “Therefore, Oracle is raising its all-cash offer to $19.50 per share. Oracle remains committed to acquiring PeopleSoft and will not be deterred by management’s maneuvers to maintain control of a company they do not own.”

He said Oracle intends to “fully support” PeopleSoft customers and products for many years to come and that satisfying those customers is the key to the success of the acquisition.

Oracle also said it plans to file suit today in Delaware against PeopleSoft, its board of directors and J.D. Edwards & Company in response to their collective efforts to eliminate the ability of PeopleSoft’s shareholders to accept the offer.

“Oracle contends that PeopleSoft and its board breached their fiduciary duties, including failure to act in the best interest of PeopleSoft’s shareholders. Oracle seeks, among other things, rescission of the amended J.D. Edwards merger agreement and redemption of the PeopleSoft ‘poison pill’,” a press release from Oracle stated.

Jacqueline Kuhn, manager of HR systems for Illinois-based Sears, Roebuck and Co., said they are not at all concerned about Oracle’s attempted takeover.

“I truly don’t feel that the buy-out will happen,” she told Canadian HR Reporter. Even if the PeopleSoft board accepted the Oracle overture, it’s likely the U.S. government would step in to stop the formation of such a large conglomerate, she said.

J.D. Edwards CEO Bob Dutkowsky told a conference of J.D. Edwards users last week that Oracle's proposed takeover “raises such serious anti-trust problems that it will face months of investigation by the U.S. Department of Justice and the Securities and Exchange Commission.

“There is a high likelihood that one or both agencies will end up blocking the action,” he said.

And even if Oracle is successful and the government does not intervene, Kuhn is not worried their service will be negatively affected by an Oracle takeover.

“I can’t see Oracle buying PeopleSoft and not supporting the millions of customers they have.” In the mean time, Sears, which has been running PeopleSoft since 1997, will move ahead with its plan to upgrade to PeopleSoft 8.8, she said. Senior executives from PeopleSoft have been in touch with senior executives from Sears and at this time they see no need to make any sort of changes to what they are doing, she added.

For more information about the Oracle-PeopleSoft battle, click on the “Related Articles” links below.

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