Sold! PeopleSoft goes to Oracle for US$10.3bn

13 Dec 2004

One of the longest-running takeover battles in IT industry history is at an end following news today that the board of PeopleSoft has agreed to the company’s being acquired by rival software vendor Oracle for a consideration of US$10.3bn, or US$26.50 a share.

During the tender battle, PeopleSoft had rejected five bids by Oracle and employed a ‘poison pill’ takeover defense. “After careful consideration, we believe this revised offer provides good value for PeopleSoft stockholders and represents a substantial increase in value from October,” said George Battle, chairman of PeopleSoft’s transaction committee.

Battle added: “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,” Battle said.

Under terms of the agreement, Oracle will revise its tender offer to US$26.50 a share by this Wednesday and it will remain open until 28 December during which time PeopleSoft shareholder must tender their shares to Oracle.

It is understood that PeopleSoft is being advised on the merger by Citigroup Global Markets and Goldman Sachs.

Initial reaction to the takeover by industry analysts has been warm. “This is good news for the industry in general and both companies’ clients in particular that this is now over,” said Ovum research director Philip Carnelley. “PeopleSoft’s customers had been suffering from uncertainty over future directions. At least now they’ll get some certainty, even if they don’t like the outcome — which now seems rather better than they feared.”

Carnelley continued: “Oracle’s applications customers have had almost equal uncertainty with many commentators believing Oracle should walk away from its applications business if it couldn’t land PeopleSoft to give it the scale it sought.

“A stronger, equivalent competitor to SAP — even if it’ll take some time to emerge properly — will also be good for the industry and future buyers. It really was having things all its own way. IBM won’t be pleased. Not only had it signed up for PeopleSoft’s largest ever installation, it is trying its best to squeeze Oracle’s infrastructure offerings out of the market between itself and Microsoft. This announcement makes that possibility recede a long way,” Carnelley concluded.

By John Kennedy