17 May 2004 Oracle has lowered its hostile bid for PeopleSoft, a rival enterprise software company, just weeks before the company is due to appear in court to challenge US regulators’ injunction to block the deal.
The lower offer of $7.7 billion reflects a 20% decline in PeopleSoft’s stock price. “Our revised offer reflects changes in market conditions and in PeopleSoft’s market valuation,” said Oracle chief financial officer Jeff Henley.
PeopleSoft’s board will consider the offer at the end of the month but a statement reiterated the company’s opposition to Oracle’s hostile takeover bid. “We note that Oracle has timed this announcement on the eve of our annual Leadership Conference, our most significant customer event for senior executives,” it said. “This is one more instance of what we firmly believe is Oracle’s ongoing effort to damage our business.”
PeopleSoft added that it believed antitrust obstacles in both Europe and the US would prevent the deal from being completed “at any price”.
The US Department of Justice has filed to block the takeover, claiming it would harm competition in the enterprise resource planning (ERP) market by reducing the major players to just two — Oracle, currently the third largest company by revenue, and SAP, the market leader. PeopleSoft is just ahead of Oracle but both are still some way behind the German software giant.
Oracle has challenged this notion, citing the supposed imminent entry of Microsoft to the mainstream market and the role of other, smaller companies. Both parties will meet in court on 7 June. The European Commission is not expected to rule on the deal until after the US wrangle is resolved.
Oracle made its first bid for PeopleSoft on 6 June 2003. It has now altered its bid three times since then, but PeopleSoft has so far rejected every offer. Both companies’ share prices have declined in the last three months, due to a general lack of confidence in the technology sector.