At long last, Oracle buys PeopleSoft

At long last, Oracle buys PeopleSoft

By Stuart Finlayson

Dec 14, 2004: After a long and often bitter battle that has lasted for more than 18 months and ultimately cost former PeopleSoft CEO Craig Conway his job, PeopleSoft's board of directors have finally acquiesced to Oracle's overtures and approved a takeover deal worth US$10.3 billion (AU$13.6 billion).

The deal was brokered just as court proceedings involving the two companies were set to commence over PeopleSoft's controversial "poison pill" anti-takeover measure, which was designed to dilute the share value of the company in the face of a hostile takeover. Oracle were seeking to have the clause removed, but that won't be necessary now, as PeopleSoft has agreed to a deal which values the company at US$26.50 a share – a little higher than Oracle's "final bid" of US$24 a share.

Oracle's CEO Larry Ellison said the US$24 bid by Oracle was a conservative estimate on their part as to PeopleSoft's value, and once they had the opportunity to review PeopleSoft's books, which was part of the negotiation agreement, Oracle realised that PeopleSoft's maintenance revenue was higher than they thought and their expenses were lower than first considered.

According to Oracle president Chuck Phillips, the agreement was reached following a telephone call by one of PeopleSoft's attorneys under instruction form a board member. It was during this call that the $26.50 offer was made.

The transaction has been approved by the boards of directors of both companies and should close by early January.

"This merger gives Oracle even more scale and momentum," said Oracle CEO Larry Ellison. "On an adjusted pro forma basis, we expect this merger to be one cent accretive in Q4 of this year (FY05), about two cents a quarter or eight cents per year, in FY06, and a bit more in FY07."

Ellison went on to pledge continued support for PeopleSoft applications and those of JD Edwards, which was acquired by PeopleSoft during the takeover battle with Oracle.

"This merger works because we will have more customers, which increases our ability to invest more in applications development and support. We intend to enhance PeopleSoft 8 and develop a PeopleSoft 9 and enhance a JD Edwards 5 and develop a JD Edwards 6. We intend to immediately extend and improve support for existing JD Edwards and PeopleSoft customers worldwide."

George "Skip" Battle, Chairman of PeopleSoft's transaction committee, said in a statement: "After careful consideration, we believe this revised offer provides good value for PeopleSoft stockholders and represents a substantial increase in value from October.

"PeopleSoft is a strong and vibrant company. Our fourth quarter numbers have been running ahead of plan. Our ability to deliver this shareholder value would not have been possible without the relentless efforts of our employees. This has been a long, emotional struggle, and our employees have consistently performed well under the most challenging of circumstances. The Board salutes our employees for their outstanding dedication to PeopleSoft and is grateful to our customers who have continued to buy our products and stand by us during these uncertain times."

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