PeopleSoft deal hurts Oracle's bid

PeopleSoft deal hurts Oracle's bid

Applications software provider PeopleSoft has struck a big blow in its attempt to fend off a hostile takeover from Oracle by completing the acquisition of J.D. Edwards.

PeopleSoft has purchased 88 percent of J.D. Edwards' outstanding shares, and expects to acquire the remaining shares by the end of the year.

The completion of the deal puts a spoke in the wheels of Oracle's bid on two fronts. Firstly, it will make any takeover by Oracle more expensive, and secondly, the addition of J.D. Edwards director Michael Maples to the board of directors at PeopleSoft will make it more difficult for Oracle to wrest control of PeopleSoft's board.

Additionally, the concerns expressed by the US Department of Justice over whether an Oracle takeover of PeopleSoft would create an anti-competitive environment in the $US20 billion market for business applications software will only intensify now that J.D. Edwards is also in the mix.

PeopleSoft President and CEO Craig Conway could barely conceal his delight at the announcement of the acquisition, and made a point of emphasising the harmonious nature of the deal, in stark contrast to Oracle's overtures.

"Today marks an important milestone in the history of PeopleSoft. The powerful combination of PeopleSoft and J.D. Edwards creates the second largest enterprise applications software company in the world. The combination expands not only our customer base, product offerings and markets, but also our talent. Our two companies share a high-performance, customer-focused culture and we look forward to welcoming our colleagues at J.D. Edwards to the PeopleSoft team."

PeopleSoft intends to issue around 52 million new shares, which will add around US$1 billion to Oracle's $19.50 per share offer, bumping the total cost up to $7.3 billion.

Despite this latest setback, Oracle seems set to pursue the acquisition, pending anti-trust approval.

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