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PeopleSoft Ups Its Bid For J.D. Edwards

The business software maker added cash and an accelerated timetable to its effort to thwart a hostile takeover bid by Oracle
PeopleSoft Amends Offer For J.D. Edwards June 16, 2003 (4:15 p.m. EST) By Antone Gonsalves, TechWeb News PeopleSoft Inc. on Monday amended its offer for J.D. Edwards & Co. in an effort to speed up the acquisition process and thwart an Oracle Corp. hostile bid.

The Pleasanton, Calif., company said its $1.75 billion offer for J.D. Edwards would include $863 million in cash and the rest in newly issued PeopleSoft shares. In its original June 2 bid, PeopleSoft had offered $1.7 billion in stock only.

A lot has changed since then, however, with rival Oracle launching a $5.1 billion takeover of PeopleSoft. A combined PeopleSoft and J.D. Edwards would displace Oracle as No. 2 in the enterprise business application market, behind leader SAP AG.

Besides stopping the merger of the two companies, the Oracle bid, if successful, would mark the end of Peoplesoft's product line. Oracle has said it would fold the applications into its own products.

The amended offer for J.D. Edwards would give its stockholders a choice of either cash or PeopleSoft stock. Both companies also said they planned to begin the merger soon and finish the process by the third quarter.

Executives with PeopleSoft and Denver-based J.D. Edwards said the new deal reaffirms their commitment to the merger and speeds up the time it will take to complete the process. In addition, the cash component means the bid is more valuable to J.D. Edwards stockholders.

"The PeopleSoft and J.D. Edwards combination will provide exceptional value for our customers and stockholders," Craig Conway, PeopleSoft president and chief executive, said. Conway has been severely critical of Oracle and its chief executive, Larry Ellison, for launching the hostile bid.

Both companies have filed suits against Oracle, claiming the Redwood City, Calif., database giant launched its hostile takeover to kill the merger. PeopleSoft also claimed Oracle is trying to ruin its business by creating uncertainty that would delay purchases by potential customers.

On Monday, PeopleSoft ran full-page ads, signed by Conway, in The Wall Street Journal and New York Times, reaffirming the company's commitment to the merger and asking customers not to delay purchases.

"PeopleSoft was the target of a hostile bid exactly because we have stronger products, exactly because we are so well positioned. The calculated approach to disrupt our business assumed a dramatic slowdown in customer purchases. Don't let it happen," Conway wrote. "Show your support for PeopleSoft by moving ahead with your planned purchases of PeopleSoft products this month."

Delays in purchasing could have a significant financial impact on PeopleSoft, since software companies close the majority of their deals at the end of the quarter.

Oracle said later Monday that it was not deterred by the amended offer. The company is offering $16 a share in cash for each PeopleSoft share, which is less than the current stock price.