13th December 2004 The biggest most acrimonious takeover battle in the history of the software industry has been won by Oracle. Its smaller rival PeopleSoft has accepted a $10.3 billion offer from competitor Oracle, ending the 18 month resistance.
PeopleSoft’s management finally agreed to the takeover after Oracle raised its previous “best and final” bid, accepted by shareholders but rejected by members of the board, by $1.1 billion. Oracle’s opening bid, back in June 2003, was $5.3 billion.
“After careful consideration, we believe this revised offer provides good value for PeopleSoft stockholders and represents a substantial increase in value from October,” said A. George Battle, Chairman of PeopleSoft’s Transaction Committee.
To further strengthen its case, Oracle also announced improving profitabily. Its second-quarter earnings rose 32% to $815 million, on sales of $2.76 billion. It expects the acquisition of PeopleSoft to boost this growth.
“This merger works because we will have more customers, which increases our ability to invest more in applications development and support,” said Oracle CEO Larry Ellison in a statement. The combined company will have revenues of more than $12 billion, but it will still lag behind rival SAP in enterprise applications.
After an outcry from PeopleSoft customers and staff, Oracle has now pledged to maintain and develop software made both by PeopleSoft and its own recent acquisition, JD Edwards. “We intend to enhance PeopleSoft 8 and develop a PeopleSoft 9 and enhance a JD Edwards 5 and develop a JD Edwards 6,” said Ellison. “We intend to immediately extend and improve support for existing JD Edwards and PeopleSoft customers worldwide.”
All pending litigation between the two companies, such as Oracle’s claim that PeopleSoft’s customer assurance program is an illegal anti-takeover poison pill, will now end. However, the merged company may have to fulfil some expensive promises in order to avoid paying PeopleSoft customers even more in compensation.