Its an early Christmas for Oracle Corp.—and PeopleSoft Inc. shareholders. The two companies announced early Monday morning a definitive merger agreement whereby Oracle will acquire PeopleSoft for $26.50 per share, or $10.3 billion.
The final buying price is $2.50 per share, or about $1.2 billion, over Oracles "best and final offer" from last month.
Oracles latest offer expires December 28, at midnight. Oracle had set a previous tender offer deadline of Nov. 19 for at least 50 percent of PeopleSoft shareholders to tender their shares at $24 per share. By midnight on the 19th, 61 percent of PeopleSofts shareholders had tendered their shares.
Todays agreement ends a 19-month-long bitter battle for PeopleSoft to remain independent. During that time Oracle submitted nearly a half dozen tender offers; each was succinctly and unanimously declined by PeopleSofts board of directors.
This latest offer, besting Oracles highest bid of $26 per share, has been approved by the boards of both companies and should close by early January, according to a statement issued by Oracle.
Oracle, the No. 2 business applications provider in the world behind SAP AG, sought to acquire PeopleSoft, the third largest applications provider in the world, to grow its flagging applications division. That business never quite achieved the same level of success as Oracles booming database division: Oracles applications division saw a 36 percent decline last quarter alone. Today, with its second quarter 2005 earnings release, Oracle reports a 57 percent increase in its applications business—one that could likely be attributed to the uncertainty in the market caused by the year-and-a-half-long scuffle between Oracle and PeopleSoft.
"This merger gives Oracle even more scale and momentum," said Larry Ellison, Oracles CEO, in a statement. "This merger is going to make that applications business bigger and stronger."
There has been some distrust among PeopleSoft customers that Oracle would continue to support PeopleSofts software in the event of an acquisition. Oracle this morning pledged to enhance PeopleSoft 8, and to develop the suites next iteration, PeopleSoft 9. The company also said it would enhance the current version of J.D. Edwards software, Enterprise One 5.0, and continue development on the 6.0 version.
PeopleSoft, of Pleasanton, Calif., acquired J.D. Edwards & Co. in August 2003—a merger that sparked Oracles initial tender offer.