According to a Dow Jones report, the Pleasonton, California-based PeopleSoft Inc. has inked a deal to acquire rival technology developer JD Edwards & Co. in a stock deal worth about $1.7 billion. The proposed acquisition will allow PeopleSoft to have a greater presence in more than 20 industries, such as manufacturing and distribution, the companies said.
Under the agreement, shareholders of the Denver-based JD Edwards will receive 0.86 of a PeopleSoft share for each JD Edwards common share. JD Edwards will become a wholly owned subsidiary of PeopleSoft and shareholders of the company will own about 25% of the combined corporation, which will have annual revenue of about $2.8 billion and about 13,000 employees.
Based on PeopleSoft’s May 30 closing price of $16.39, the deal is valued at about $14.10 a share, representing a premium of 19% to JD Edwards’ Friday closing of $11.81. Both stocks trade on the Nasdaq market.
The proposed acquisition, which has been approved by the boards of both companies, is expected to be tax-free to shareholders and close late in the third quarter or early fourth quarter. Directors and executives owning shares of their respective companies also have agreed to vote in favor of the deal, which still requires regulatory and shareholders approvals.
PeopleSoft said it expects the deal will add to its 2004 earnings before amortization for acquired intangibles, deferred revenue write-downs and other adjustments for purchase accounting. 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.