Oracle buys PeopleSoft at last

Rethink IT, Jan, 2005

After 18 months of feuding, Oracle has finally acquired PeopleSoft for $26.50 a share in cash, or $10.3bn.

Oracle brought an end to the hostilities by raising its offer from $24 a share, which PeopleSoft's board had rejected as inadequate. The final offer represents a 75% premium from PeopleSoft's market value before Oracle launched the takeover battle in June 2003.

"After careful consideration, we believe this revised offer provides good value for PeopleSoft stockholders and represents a substantial increase in value from October," said George Battle, chairman of PeopleSoft's transaction committee. "This has been a long, emotional struggle, and our employees have consistently performed well under the most challenging of circumstances."

Shares of both companies advanced on the news, with PeopleSoft up $2.46, or 10%, to $26.41 and Oracle advancing $ 1.07, or 8. 1%, to $14.35 in early trading on the Nasdaq Stock Market.

By picking up 12,750 PeopleSoft customers and more than $2bn in annual revenue, Oracle hopes to mount a more serious challenge to German software maker SAP in business-applications software.

Oracle eventually hopes to buy other companies, but won't consider any other large acquisitions until PeopleSoft is fully digested, CEO Larry Ellison assured analysts.

Just before the deal, Oracle received a simple majority of endorsements from PeopleSoft shareholders Friday, yet PeopleSoft's directors still denied the $24 per share acquisition attempt, insisting their company is worth far more.

The next development came when Oracle asked a judge to void PeopleSoft's poison pill. This was quickly followed by Oracle's improved bid.