Oracle Makes Play for PeopleSoft

Jun 10, 2003

In an effort to improve its place in the market, software maker Oracle has made an aggressive move to  purchase competitor PeopleSoft for $5.1 billion. Oracle execs believe that the combined company would have a better chance of competing against market leader SAP. The offer was directed at shareholders and consisted of a cash offer of $16 a share, 6% higher than PeopleSoft's closing price of $15.11 in Thursday's Nasdaq trading. Some analysts have said that Oracle will have to offer $20 to $25 a share to garner shareholder support, but Oracle CEO Larry Ellison has stood by his original offer. Oracle's offer comes on the heels of an offer PeopleSoft made last week to purchase J.D. Edwards & Co. for $1.6 billion in stock. The J.D. Edwards deal would be likely to put PeopleSoft ahead of Oracle if it were to go through. Ellison has said the J.D. Edwards deal would be risky for PeopleSoft investors and said agreeing to Oracle's offer would be the safer route. Oracle said that if its bid for PeopleSoft is successful, it would review whether it would support the proposed acquisition of J.D. Edwards. Although Oracle does not plan to sell PeopleSoft software to new clients, Oracle has stated that they will support upgrades and extend support for current PeopleSoft clients. Oracle's acquisition of PeopleSoft would be subject to regulatory approval and the amendment of PeopleSoft's shareholder rights plan. It would not be subject to due diligence or financing. Oracle is being advised by and provided with bridge financing from Credit Suisse First Boston. They expect a deal to close in July.

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