PeopleSoft resisting takeover attempt by Oracle

PeopleSoft CEO calls Oracle's bid "horrifically unprofessional"

Software giant Oracle Corp. was expected to formally begin its $5.1-billion (all figures U.S.) takeover of rival PeopleSoft Inc. yesterday. But it's likely to be a very bumpy ride.

The two companies have an acrimonious relationship that has been marked by sniping between the two chief executive officers — Oracle’s Larry Ellison and PeopleSoft’s Craig Conway. Conway worked under Ellison at Oracle from 1985 to 1993.

PeopleSoft has reacted negatively to Oracle’s effort to swallow the company, and Conway has called Oracle’s offer “horrifically unprofessional.”

Conway said rival Oracle is simply trying to ruin PeopleSoft’s proposed $1.8-billion merger with J.D. Edwards & Company.

“I think (Ellison) saw a wedding and he showed up with a shotgun because he didn’t get invited,” Conway told The Associated Press. “It’s a page straight out of Genghis Kahn.”

But Ellison said the deal between PeopleSoft and J.D. Edwards is “very peculiar” because both companies are in distress.

“We think this all-cash offer is a much safer alternative,” said Ellison.

The takeover would see Oracle pay $5.1 billion to purchase all outstanding shares of PeopleSoft. The takeover bid, announced by Oracle on Friday, will offer $16 a share, a 5.9-per cent premium over PeopleSoft’s closing price of $15.11 per share on Thursday. PeopleSoft is listed on the Nasdaq Stock Market. But PeopleSoft’s shares soared 18 per cent to $17.82 at the end of day Friday, which means investors might be expecting Oracle to raise its offer.

“The acquisition of PeopleSoft will immediately make Oracle an even more profitable and competitive company,” said Ellison on Friday. “Although we will not be actively selling PeopleSoft products to new customers, we will provide enhanced support for all PeopleSoft’s products. Furthermore, we will be incorporating the advanced features from the PeopleSoft products into future versions of the Oracle eBusiness Suite.”

Under Oracle's plan, the PeopleSoft brand would disappear, but technical support would be provided to PeopleSoft's existing customers. Oracle said PeopleSoft's 8,000 workers could expect mass layoffs, but did not go into specifics.

The announcement by Oracle comes on the heels of PeopleSoft’s decision to purchase J.D. Edwards & Company for $1.8 billion in stock that would have vaulted PeopleSoft ahead of Oracle in terms of market share and software applications.

But Oracle said that deal might not happen now. Oracle said that if its bid for PeopleSoft is successful, it will review the J.D. Edwards deal.

“PeopleSoft has recently signed a merger agreement with J.D. Edwards & Company that is subject to several conditions and is not scheduled to be completed until this fall,” the Oracle press release stated. “Once Oracle’s acquisition of PeopleSoft is complete, it will review whether, and on what terms, Oracle would support that transaction.”

But in another twist, Oracle said it might pursue J.D. Edwards on its own if its takeover of PeopleSoft fails.

If the PeopleSoft deal closes, Oracle would be in a stronger position to compete with Germany-based SAP AG, the biggest manufacturer of business software applications.

PeopleSoft has about $1.93 billion in cash and securities, which means the deal would end up costing Oracle about $3.2 billion.

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