As expected, Oracle has raised the stakes in its hostile takeover action for PeopleSoft by increasing its bid by 24pc from US$5.1bn to US$6.3bn. The Oracle bid is essentially an offer of $19.50 per share in cash for all outstanding PeopleSoft shares.
PeopleSoft and JD Edwards, themselves planning a merger, had dismissed Oracle’s original $5.1bn offer as a deliberate attempt to prevent that deal from taking place. The two companies originally sought to merge as part of a US$1.75bn “all-share” deal offer by PeopleSoft. In recent days, JD Edwards lodged a lawsuit against Oracle for $1.75bn and additional punitive damages for attempting to derail the merger.
Yesterday, PeopleSoft revealed plans to sweeten its proposed merger with JD Edwards offering JD Edwards about US$863m in cash plus some 52.6 million new PeopleSoft shares, a package worth US$1.75bn.
The move effectively aimed to take PeopleSoft shareholders out of the equation, making it harder for Oracle to appeal to their interests. But it also means that PeopleSoft will be spending nearly half of its $1.9bn in cash reserves, making it a less attractive business for Oracle to acquire. PeopleSoft has also moved to close the deal by September instead of later in the year.
However, to counter this latest move by PeopleSoft, Oracle has been forced to increase its own cash offer for the company in order to make the deal more attractive to PeopleSoft shareholders.
Oracle CEO Larry Ellison said: “In the last few days, Oracle executives have had the opportunity top speak with the holders of a majority of PeopleSoft shares. Many of these shareholders indicated the prices at which they would tender their shares.
“Therefore, Oracle is raising its all-cash offer to $19.50 per share. Oracle remains committed to acquiring PeopleSoft and will not be deterred by management’s manoeuvres to maintain control of a company they do not own.”
By John Kennedy
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