4 February 2004 Database and applications giant Oracle has raised its hostile takeover bid for rival PeopleSoft from $7.3 billion to $9.4 billion.
The increase in the offer, from $19.50 per share to $26 per share, could finally tip the balance in Oracle’s favour after its previous bid was snubbed by the vast majority of shareholders.
Oracle’s new bid represents a premium of 18.8% on PeopleSoft’s stock price of $21.89 at the close yesterday. Oracle has also put the deadline back for acceptances from midnight on 13 February to midnight of 12 March.
The revised offer follows PeopleSoft’s disclosure on 30 January of stronger than expected fourth quarter results, which kept the software supplier’s share price well above Oracle’s offer of $19.50 per share.
The increased offer also comes just days after Oracle nominated its candidates for shareholder elections to the PeopleSoft board, as well putting forth a proposal to increase the board from eight members to nine; both moves intended to force the issue.
“Given PeopleSoft’s current prospects… This is our final price,” said Oracle chief financial officer Jeff Henley. “We urge PeopleSoft directors to seriously consider our offer and out the interests of their shareholders first.”
However, PeopleSoft has today advised stockholders to take no action in response to Oracle’s revised tender offer until the company’s board of directors has met to discuss the offer and made its subsequent recommendation to shareholders.
Oracle launched its bid for rival PeopleSoft in June 2003 and has twice raised its bid to reflect both PeopleSoft’s rising market value, as well as its successful $1.7 billion acquisition of JD Edwards. However, the PeopleSoft board had unanimously rejected both offers claiming that they significantly undervalued the company.
Oracle must also convince both US and European Commission antitrust regulators that the takeover will not undermine competition in the software sector. Regulators in the US are expected to announce a decision before the end of March 2004 while the Commission has yet to set a final date.
