Oracle, PeopleSoft reach merger pact

Monday 13 December 2004 13:26 CET | News

PeopleSoft Inc. agreed Monday to be acquired by Oracle Corp. after Larry Ellisons company raised its unsolicited offer to $10.3 billion, or $26.50 a share, to end a bitter 18-month takeover battle.

Ultimately, the price to win over the board of Pleasanton, Calif., PeopleSoft was 10 percent higher than what Oracle had previously called its best and final offer of $24 a share. When Oracle first launched the audacious proposal in June 2003, it was bidding just $16 a share. In recent trading on Wall Street, PeopleSoft shares jumped just over 10 percent to $26.43, while shares of Oracle rose 9.5 percent to $14.54. The deal marks a hard-won victory for Ellison, Oracles founder and chief executive, who has maintained that the business-software industry is overdue for consolidation. Ellison targeted PeopleSoft in particular with an eye trained on its recurring stream of software-license revenue as well as its large customer base in the corporate-applications market. Following weekend talks, the two boards signed a definitive merger agreement that needs to be approved by shareholders. Oracle said it expects the deal to close by early January. Both sides agreed to drop all outstanding legal disputes related to their long-running battle. Ellison told reporters and analysts on a conference call that a PeopleSoft representative approached the business software firm over the weekend -- just as his trial team was ready to proceed with litigation -- in an attempt to end the companies battle. Viewing detailed PeopleSoft financial information gave Oracle the confidence to increase its offer for the company, Ellison said. Several meetings were held between the two parties during the weekend, and a deal was signed late Sunday evening. Oracle singled out PeopleSofts revenue stream from maintenance and support contracts as particularly contributing to a revised view of its finances. PeopleSofts board had spurned five Oracle takeover bids over the past 18 months and maintained that the $24 offer didnt value the company fairly. The companies had been due to face off yet again in a Delaware courtroom this week as a judge was set to consider Oracles request to strike down PeopleSofts poison pill takeover defense. PeopleSofts last word on the Oracle battle Friday had been that it would hold its annual shareholder meeting on March 25 and nominated four current directors for contested board seats, setting the stage for a final showdown with the larger company, which had nominated candidates of its own to secure boardroom control. Oracle had doggedly pursued PeopleSoft as its best option for a buyout. It persisted even as the U.S. government denied the deal on antitrust concerns. Against the odds, Oracle challenged the decision in court and won. European regulatory approval followed later. Oracle then went on the offensive and took PeopleSoft to court in Delaware challenging the boards poison pill defense. Testimony during that case contributed to the ouster of PeopleSoft Chief Executive Craig Conway, the most vocal opponent of an Oracle deal. Oracle executives have also stated interest in taking over BEA Systems, Lawson Software, and Siebel Systems.

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