PeopleSoft Inc. on Monday amended its deal to buy enterprise software confederate J.D. Edwards and Co. This came after PeopleSoft on Friday filed charges against Oracle Corp., announcing that it wants to put an end to Oracles “sham tender offer” that company officials claim is aimed at “destroying PeopleSofts business.”
The complaint was filed in Alameda County [Calif.] Superior Court and alleges that Oracles hostile takeover bid, which was launched June 6, represents unfair business practices, trade libel and tortuous interference with PeopleSofts customer relations. The aim of the suit is to secure an injunction barring Oracle from proceeding with its tender offer.
The suit alleges that Oracles true intent in making the tender offer was to “undercut PeopleSofts business operations by disparaging PeopleSofts products, services and future prospects; undermine PeopleSofts viability by creating uncertainty and doubt in the minds of PeopleSofts customers and prospective customers; and interfere with PeopleSofts plan to merge with J.D. Edwards & Co.”
“By making an offer with the acknowledged intent of eliminating PeopleSofts business, Oracle seeks to disrupt PeopleSofts efforts to complete new sales, thus effectively damaging PeopleSofts business even if Oracle never buys a single share of PeopleSoft stock,” said PeopleSoft President and CEO Craig Conway, in a release.
Conway pledged to forge ahead with the merger with J.D. Edwards. “We intend to compete vigorously in the marketplace, and complete the merger with J.D. Edwards, despite Oracles unlawful efforts to destroy competition,” he said in the release.
Oracle spokesman Jim Finn insinuated that the charges are evidence that PeopleSoft is wishy-washy, given that its flip-flopped on the issue of whether it will file charges against Oracle, or Redwood Shores, Calif. “PeopleSoft seems to have revived its on-again, off-again litigation strategy,” he said in a statement. “This matter must be decided by PeopleSoft shareholders and not by frivolous litigation. As for PeopleSofts cryptic reference to its secret discussions with J.D. Edwards, any action by the PeopleSoft board to take the vote away from PeopleSoft shareholders and to further entrench themselves would only compound their abuse of fiduciary duty.”
With regards to PeopleSofts attempt to merge with Denver-based J.D. Edwards, the two companies on Monday announced that they have amended their merger agreement in order to speed it up. The boards of both companies unanimously approved the amendment and hope to get the deal finalized in the third quarter.
The central change is offering J.D. Edwards shareholders some cash in addition to PeopleSoft stock, instead of the all-stock deal that was originally proposed. The revised deal offers J.D. Edwards shareholders $7.05 per share plus a little less than half of one PeopleSoft share for each J.D. Edwards share. This raises the total value of the deal to $1.75 billion, up from about $1.7 billion.
Under the amended offer, J.D. Edwards shareholders would own 14.3 percent of PeopleSoft after the merger is completed.
The amended agreement reaffirms PeopleSofts and J.D. Edwards commitment to merge, saying that the combination is a “clear win for stockholders, customers and employees.”
“We believe what were doing is accelerating, for the benefit of shareholders, the closing and minimizing customer uncertainty, and protecting and enhancing shareholder value,” said Steve Swasey, director of corporate public relations for PeopleSoft, of Pleasanton, Calif.
PeopleSoft updated previous estimates of what would come of the merger. Company officials now say that opportunities to improve operating efficiencies, reduce expenses and enhance sales are expected to provide cost savings between $150 million and $200 million in 2004. Those savings would come from efficiencies in the companys consulting and sales organizations, from cross-selling and upselling, and from weeding out redundant functions, headcount and facilities, officials said.
PeopleSoft said in a release that it expects to commence the Exchange Offer shortly. Upon completion of the Exchange Offer, remaining J.D. Edwards shares would be acquired in a second-step merger.
“Here they go again,” Finn said, in a continuing battle of press releases. He called the accelerated PeopleSoft-J.D. Edwards deal an attempt to take away shareholders opportunity to vote on the deal.
This story was edited after its original posting to add more detail on the amended PeopleSoft/J.D. Edwards deal.