Oracle lowers credit line for PeopleSoft bid

By Stuart Finlayson

Oracle has significantly reduced the amount of credit it can tap into to cover the cost of acquiring PeopleSoft, owing to its healthy cash reserves.

The company had teed up a $5 billion (all figures US dollars) credit facility when it made its initial move to acquire the rival business software maker in June last year. Now, thanks to a healthy balance sheet which includes cash reserves of more than $8.1 billion, Oracle has opted to reduce its credit facility to $1.5 billion.

The move will help lower costs around the ongoing bid, with Oracle having spent around $33.4 million on its bid to acquire PeopleSoft as of November 30, a proportion of which went on maintaining the $5 billion line of credit, according to a recent filing Oracle placed with the Securities and Exchange Commission.

Oracle's bid remains under scrutiny from antitrust regulators at the US Department of Justice, who are expected to give a decision on whether they will give the move the go-ahead or block it sometime this month.

In the meantime, Oracle has once again extended the deadline for submission of shares by PeopleSoft investors, with the offer now extended to February 13.

Given that PeopleSoft's shares are currently trading around the $22.80 mark, Oracle may need to improve its earlier offer of $19.50 a share to succeed in its attempt to takeover its closest rival.

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