Pac Man Rules Software Makers: Oracle Bids for PeopleSoft

June 6, 2003 ( - Just days after business software maker PeopleSoft Inc., announced it was gobbling up rival JD Edwards & Co., software giant Oracle Corp. unveiled a $5.1-bilion cash offer to snap up PeopleSoft.

The Redwood Shores, California-based Oracle, a database software manufacturer, said Chairman and Chief Executive Larry Ellison sent a letter to PeopleSoft’s board asking for a negotiating session, according to a Wall Street Journal report.

Oracle’s offer of $16 a share represents a 5.9% premium to PeopleSoft’s Thursday closing price of $15.11.

Ellison said an acquisition of Pleasonton, California-based PeopleSoft would “immediately make Oracle an even more profitable and competitive company.” PeopleSoft, representatives weren’t available to comment on the offer.

Oracle, which said it plans to launch the tender on Monday, said the bid is subject to antitrust approval and to the implementation of changes to or cancellation of PeopleSoft’s poison-pill provision, a plan designed to protect against unwanted suitors.

Oracle said an acquisition of PeopleSoft would increase per-share earnings during the first quarter in which the companies are merged. Oracle also expects that a PeopleSoft acquisition would bring “substantial” cost savings and “minimal” business-integration risk.

Shotgun Wedding?

Friday afternoon PeopleSoft Chief Executive Craig Conway denounced Oracle’s move as a “desperate act.” In an interview from Paris, the Wall Street Journal quoted Conway as describing the deal as an example of “atrociously bad behavior from an atrociously bad company” and said PeopleSoft’s directors were appalled by Oracle’s action. “It’s like having a wedding and Larry [Ellison] showing up with a shotgun trying to get someone to marry him,” said Conway, who joined PeopleSoft in 1999 and worked at Oracle for eight years, according to the WSJ. However, Conway also said that PeopleSoft’s board will review Oracle’s offer and provide an official response as soon as possible.

Oracle said it hadn’t made a decision on whether the JD Edwards deal would proceed if its bid for PeopleSoft proves successful. Commenting on the $1.58-billion PeopleSoft stock offer (See PeopleSoft Acquires JD Edwards in Stock Deal). Oracle said that, once it completes the proposed acquisition of PeopleSoft, Oracle will “review whether, and on what terms, Oracle would support that transaction (with JD Edwards).”

PeopleSoft, the maker of software for human resources and financial applications said its focus on the large enterprise and services industries will fit well with JD Edwards’ strength in the mid-market and manufacturing sectors.