Oracle Sweetens Its PeopleSoft Offer

Oracle raises its tender offer to $19.50 per share and says it will sue PeopleSoft and J.D. Edwards.

Oracle Corp. raised the stakes in its bid to buy enterprise software rival PeopleSoft Inc. this morning by upping its offer by nearly 22 percent.

Oracle, of Redwood Shores, Calif., announced that it will raise the price it is offering for PeopleSoft stock to $19.50 per share, up from $16 per share. The revised offer puts the value of the deal at about $6.3 billion.

The new offer erases what many observers had said was one possible impediment to the deal—that the price was too low. The original offer price was slightly under the price that PeopleSoft shares were trading on the Nasdaq market. The updated price is a 29 percent premium on the PeopleSoft stock price prior to Oracles original cash offer, Oracle officials said.

CEO Larry Ellison said in a statement that Oracle officials spoke to holders of a majority of PeopleSoft shares over the past few days and that they said they wanted more for the stock.

"Oracle remains committed to acquiring PeopleSoft and will not be deterred by managements maneuvers to maintain control of a company they do not own," Ellison said, in the statement.

He also hoped to remove another roadblock to the deal, adding that Oracle would "fully support PeopleSoft customers and products for many years to come. Satisfying those customers is the key to the success of this acquisition."

Oracle will answer PeopleSofts lawsuit against the company, which was filed last Friday in a California court, with its own suit against PeopleSoft and against J.D Edwards & Co., a midmarket enterprise software developer that PeopleSoft is trying to acquire. The suit from PeopleSoft, of Pleasanton, Calif., alleged that Oracle was trying to undermine its business by launching the hostile takeover bid. PeopleSofts board of directors last week urged shareholders to reject Oracles tender offer and this week raised its own offer to buy Denver-based J.D. Edwards.

The Oracle suit in Delaware courts charges the PeopleSoft board of breaching its fiduciary responsibility to shareholders and seeks to annul two things—PeopleSofts updated offer to buy J.D. Edwards and PeopleSofts "poison pill," a corporate bylaw that would make the cost of a hostile takeover much more expensive.

In a conference call with financial analysts this morning, Oracle Executive Vice President Chuck Phillips reiterated that Oracle would continue to support PeopleSoft applications, though he would not commit to any specific timeframe.

"We are extending the support period for PeopleSoft products," said Phillips. "Contrary to numerous reports in the press, we do not plan to eliminate support for PeopleSoft products, period.

PeopleSoft customers will not be forced to migrate to Oracle applications, period."

PeopleSoft customers would receive a free license upgrade to like modules of Oracles applications if and when they elect to migrate, he said.