PeopleSoft sweetens
offer for JD Edwards


17 Jun 2003

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In an effort to strengthen its bid for enterprise software firm JD Edwards, PeopleSoft is reported to have revised its $1.75bn all-stock offer for the company by including a large chunk of cash and new stock. The renewed bid should anger Oracle, which has instigated a $5.1bn hostile takeover bid for PeopleSoft and is currently being sued by JD Edwards.

A fortnight ago, PeopleSoft revealed that it intended to acquire JD Edwards for $1.75bn. Oracle responded within days with a hostile takeover bid of PeopleSoft in a move thought as a deliberate effort to derail the PeopleSoft/JD Edwards deal. PeopleSoft rejected the bid, describing it as “a transparent attempt to disrupt the acquisition of JD Edwards by PeopleSoft”.

JD Edwards in turn decided to sue Oracle for $1.7bn for interfering in the merger. In a statement, JD Edwards’ CEO Bob Dutkowsky said: “Oracle’s sole aim is to disrupt a merger that will create value for the key stakeholders of JD Edwards and PeopleSoft.”

It has come to light that a new deal has been put forward by PeopleSoft, offering JD Edwards about $863m in cash plus some 52.6 million new PeopleSoft shares, a package worth $1.75bn.

The move effectively takes 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 less an 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 may be forced to increase its own cash offer for the company in order to make the deal more attractive to PeopleSoft shareholders.

On Friday last, JD Edwards has filed a lawsuit in a Colorado courtroom alleging that Oracle “tortiously interfered” with the deal. It is seeking US$1.7bn in compensatory damages and an unspecified amount in punitive damages.

JD Edwards is also suing Oracle in a California court, having issued actions against Oracle CEO Larry Ellison and its vice president Chuck Philips, charging them with unfair business practices and seeking an injunction to prevent Oracle from proceeding to acquire PeopleSoft.

In a statement, JD Edwards’ CEO Bob Dutkowsky said: “Oracle’s sole aim is to disrupt a merger that will create value for the key stakeholders of JD Edwards and PeopleSoft.

“Oracle’s unsolicited offer for PeopleSoft will only destroy value for our companies’ shareholders, customers and employees and the technology community overall. We will not sit idly by while Oracle pursues this arrogant, unlawful and destructive course of action.”

By John Kennedy