Oracle makes US$5.1bn bid for PeopleSoft

6 Jun 2003

Oracle has made a dramatic US$5.1bn offer for enterprise software vendor PeopleSoft following what has been a dramatic week for the enterprise resource planning (ERP) software segment. The news comes within days of PeopleSoft announcing plans to acquire competitor JD Edwards.

In a statement this afternoon, Oracle announced that it will commence a cash tender offer to purchase all the outstanding shares of PeopleSoft Inc for US$16 a share, or US$5.1bn. Earlier this week, PeopleSoft revealed its intentions to acquire competitor JD Edwards in an all-share deal worth US$1.7bn, resulting in a combined entity with revenues of US$2.8bn, 13,000 employees and more than 11,000 customers in 150 countries and 20 industry sectors worldwide.

If the Oracle bid goes ahead, it will make the company a dominant player in the lucrative ERP vendor market up until now populated at the high end by five key players known collectively as JBOPS (JD Edwards, Baan, Oracle, PeopleSoft and SAP).

“The acquisition of PeopleSoft will immediately make Oracle an even more profitable and competitive company,” said Oracle Chairman and CEO Larry Ellison. “Although we will not be actively selling PeopleSoft products to new customers, we will provide enhanced support for all PeopleSoft products. Furthermore, we will be incorporating the advanced features from the PeopleSoft products into future versions of the Oracle eBusiness Suite.”

Ellison has submitted a letter stating Oracle’s intentions to PeopleSoft’s Board of Directors. If his offer is accepted, it will see the removal of the firm’s existing board. The tender offer, which Oracle says will not be subject to due diligence, will be formally presented on Monday. Credit Suisse First Boston LLC has agreed to provide the bridge financing facility and is advising Oracle on the transaction.

It is not clear yet whether the PeopleSoft acquisition of JD Edwards announced earlier this week will be jeopardised by the potential acquisition. “Once Oracle’s acquisition of PeopleSoft is complete, it will review whether, and on what terms, Oracle would support that transaction,” Oracle said in a statement.

In related news, Oracle revealed that expects to meet or exceed earnings estimates for the forthcoming fourth quarter results expected to be unveiled on 17 June. The company said it expects to report fiscal fourth quarter GAAP (generally accepted accounting principles) earnings per share of US$0.14 to US$0.15.

By John Kennedy