PeopleSoft’s $1.7 billion bid for JD Edwards accepted


18 July 2003 PeopleSoft has become the world’s second biggest enterprise application software supplier after JD Edwards’ stockholders accepted its $1.7 billion bid.

Some 88% of JD Edwards’ shareholders had registered their acceptance of the bid by midnight last night, enabling PeopleSoft to complete its acquisition.

The deal means that Oracle CEO Larry Ellison will have to up his $6.3 billion hostile bid for PeopleSoft if he is to stand a chance of winning — if his bid is not blocked by antitrust authorities in the US.

PeopleSoft CEO Craig Conway was, understandably, in a buoyant mood. “Today marks an important milestone in the history of PeopleSoft,” he said. “The combination expands not only our customer base, product offerings and markets, but also our talent,” he added.

PeopleSoft executives have also suggest that they will squeeze savings of about about $80 million from the combined entity in the first year. Combined, the companies will have about $2.8 billion in annual revenues, 13,000 employees and 11,000 customers in more than 150 countries.

However, JD Edwards’ top executives will be lavishly rewarded for delivering the vote. CEO Bob Dutkowsky will pocket $2.6 million for his role, while chief financial officer Richard Allen will collect $1.8 million.

The green light for the acquisition came only a few hours after PeopleSoft announced a relatively strong set of quarterly financial results.

In the second quarter to the end of June, PeopleSoft’s revenues rose 3% compared to the same period a year earlier, weigh in at $497.4 million.

With users of its software facing an end-of-year cut-off point on support for PeopleSoft 7, revenues from upgrades and other maintenance rose by one fifth to $205.6 million, while professional services revenue were up just 1% at $180.2 million.

However, sales of new software licences tumbled 15% to $111.7 million. PeopleSoft kept that figure from falling further by introducing a rebate scheme under which it ‘promised’ to repay customers between two and five times the amount of their original licence fee if Oracle halted development of PeopleSoft products within two years of any acquisition.

The impact of that initiative was reflected in a 38% sequential rise in licence revenues. Most of the 100 new customers added during the second quarter signed up for that deal. In the same period a year earlier, there were 73 new sign-ups.

Despite the extra cost associated with winning over apprehensive customers, the company’s profits remained solid, with net income edging up slightly to $36.5 million, from $30.0 million.

For the third quarter, PeopleSoft management expects revenues of between $470 million and $480 million, compared to $471 million in the third quarter of 2002. Licence revenues are forecast to be between $85 million and $90 million, down substantially on the $122 million recorded in the year-earlier period.

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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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