Oracle makes 'final' bid for PeopleSoft

The announcement marks the second time Oracle has raised its offer for PeopleSoft, which specializes in enterprise resource planning and customer relationship management applications, since it first made a bid for the company last June. Oracle's original offer was $16 per share, which the company increased to $19.50 only two weeks later. Wednesday's bid represents a nearly 19 percent premium over PeopleSoft's closing stock price of $21.89 Tuesday.

Oracle said the current offer would be the database software giant's last bid for PeopleSoft. In a statement, Oracle Chairman Jeff Henley encouraged PeopleSoft shareholders to consider the offer seriously.

"This is our final price," Henley said in the statement.

"Given PeopleSoft's current prospects, including its recent downward revisions-to-earnings guidance for the first quarter, we believe our offer presents compelling value to PeopleSoft's stockholders," he said. "Oracle remains fully committed to completing this deal on terms that will benefit the stockholders of both companies."

PeopleSoft responded only by saying it would take Oracle's higher offer under consideration.

"Peoplesoft's board of directors, consistent with its fiduciary duties, will meet to review Oracle's revised $26-per-share tender offer and make its recommendations to PeopleSoft's stockholders in due course," said Steve Swasey, a company spokesman.

Oracle is still awaiting antitrust approval for the buyout proposal from the U.S. Department of Justice, which is expected to rule on the matter before March 12. As part of its new bid, the company also extended its time frame for PeopleSoft shareholders to tender shares of the software maker's stock until the same date. Oracle's previous offer was set to expire Feb. 13.

Oracle Chief Executive Larry Ellison, who has at times been criticized for pursuing the PeopleSoft takeover to the detriment of the enterprise applications market, continued to stump in favor of the merger to shareholders of both companies.

"We believe this acquisition is procompetitive, will benefit the customers of both companies and will make Oracle an even more profitable company," Ellison said in a statement. "We stand by our pledge to support the PeopleSoft customer base and provide enhanced support for PeopleSoft products."

Last week, PeopleSoft announced that it would hold its annual shareholder meeting and director election March 25. Executives at both companies have been gearing up for a boardroom management battle, as Oracle has already nominated replacements for four PeopleSoft board members who are up for re-election. Oracle has also proposed an expansion of the PeopleSoft board to nine directors and recommended a fifth nominee for the additional position.

PeopleSoft's board has rejected Oracle's tender offer twice before and retains the power to overturn so-called poison pill measures that are currently blocking the bid. Among the board members up for re-election is Craig Conway, PeopleSoft's current chief executive, who has publicly sparred with Ellison over the strategy behind the takeover.

Oracle faces several other obstacles in its effort to close the deal, including an antitrust review from the European Commission and PeopleSoft's money-back customer guarantee program that could make Oracle liable for more than $1.5 billion in payments, if the acquisition were to take place.

While industry watchers seemed surprised by the offer and said they would need more time to mull the implications of Oracle's latest maneuver, most echoed sentiments that the bid increase serves as proof that the takeover clash remains far from over. Some experts had previously viewed the deal as dead in the water.

"(Oracle) continues to reaffirm the seriousness of its bid, and this shows that they don't plan to walk away from it," said Scott Nelson, an analyst at Stamford, Conn.-based Gartner.