Oracle Extends Tender Offer for PeopleSoft

Oracle announced that it has extended its tender offer to acquire rival PeopleSoft Inc. to midnight Friday, July 18.

The saga continues.

Oracle Corp. announced this morning that it has extended its to midnight Friday, July 18.

Oracles initial purchase offer, logged June 9, expired today.

As of the close of business on July 3, about 35 million PeopleSoft shares had been tendered and not withdrawn from the offer, according to Oracle officials.

Oracles all-cash bid for rival PeopleSoft amounts to $19.50 per share, or about $6.3 billion—a 29 percent premium on PeopleSofts stock price when the deal was announced.

To stay in the game, what Oracle may have to do next is raise its offer price. PeopleSoft has contended from the start that the offer price undervalues its company and earnings potential.

However, it was largely speculated that the deal would harm PeopleSofts stock price— in the short term, at least.

To Wall Streets surprise, PeopleSoft last week announced strong preliminary second-quarter earnings.

Based on first round information, PeopleSoft expects to post earnings per share of 13 cents to 14 cents per share, which includes $10 million to $15 million in costs to defend Oracles unsolicited offer.

PeopleSoft, of Pleasanton, Calif., originally gave guidance of 11 cents to 12 cents earnings per share for the quarter. The e-business software maker will announce its second-quarter earnings at the end of the month.

Craig Conway, PeopleSofts CEO, attributed a large part of the quarters success to the vote of confidence from PeopleSoft customers—and their anger at Oracle over the deal.

More likely, according to AMR Research, it was PeopleSofts customer assurance program that attributed to the quarters success. That program guaranteed a return of two to five times their original license deal to customers purchasing PeopleSoft products should Oracle take over the company. (While the original assurance offer ended June 30, PeopleSoft is considering extending it to the third quarter, according to Conway, who discussed the deal in the preliminary earnings call with analysts last week.)

The customer guarantee served a dual purpose: It acted as an additional "poison pill" to Oracle and it appears to have swayed customers that are concerned with PeopleSofts future to buy the companys products.