PeopleSoft rejects Oracle’s $9.4 billion offer

9 February 2004 The board of PeopleSoft has rejected rival Oracle’s increased bid for the company, claiming that the new offer still does not reflect PeopleSoft’s real value.


Why PeopleSoft rejected Oracle — again

  • PeopleSoft currently trading at low end of its historical valuation, relative to earnings.
  • PeopleSoft currently trading at lower multiples compared to its peers in the software industry.

Both as a result of “Oracle’s hostile actions”

  • Majority of Wall Street analysts who published price targets prior to Oracle’s new bid had targets above Oracle’s bid price of $26 per share.
  • Price offered values the company at multiples well below those paid in other major transactions in the software industry.



Oracle surprised PeopleSoft on 4 February when it increased its hostile bid for the company from $19.50 per share to $26 per share, an increase of one-third and a premium of 18.8% on PeopleSoft’s stock price before the increased bid was announced.

The new bid — the third time that Oracle has raised its offer — increases the valuation placed on the company by Oracle, from $7.3 billion to $9.4 billion. Oracle’s original bid, made in June 2003, had been just $5.1 billion.

Enterprise applications software supplier PeopleSoft claimed that it had consulted with investment banks Citigroup and Goldman Sachs before formally rejecting the offer, claiming that it still does not fairly value the company.

PeopleSoft also accused Oracle of “attempting to damage PeopleSoft… in an apparent effort to acquire the company at an unreasonably low price”.

The company cited incorrect information given out by Oracle, claiming that PeopleSoft had lowered its earnings guidance for the first quarter of 2004; Oracle’s intention to discontinue the PeopleSoft product line; and allegations that Oracle has “attempted to manipulate the antitrust process”, causing delays and “damage [to] PeopleSoft’s relationships with customers”.

“The board believes that PeopleSoft has a better plan for stockholders. Oracle’s offer does not begin to reflect the company’s real value, including the value we are creating through our successful combination with JD Edwards,” said PeopleSoft CEO Craig Conway.

He concluded: “We believe Oracle is using the entire process — tender offer, antitrust and proxy solicitation — in an attempt to damage our company”.

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Ben Rossi

Ben was Vitesse Media's editorial director, leading content creation and editorial strategy across all Vitesse products, including its market-leading B2B and consumer magazines, websites, research and...

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