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Oracle's PeopleSoft offer to expire July 7

The company's hostile takeover bid for its rival software maker will expire early next month, but Oracle expects to extend the offer, says the formal offer filed Monday with the SEC.

Oracle's hostile takeover bid for rival software maker PeopleSoft will expire July 7, but Oracle expects to extend the offer, according to the formal offer filed Monday with the Securities and Exchange Commission.

The deal also requires PeopleSoft's board of directors to invalidate their "poison pill," a move designed to make a stock less attractive to a prospective buyer, in order for it to go forward.

Oracle stunned the software community on Friday when it launched a $5.1 billion hostile bid for PeopleSoft, only a few days after PeopleSoft announced a $1.7 billion merger with J.D. Edwards.

According to the new filing, on June 5, 2002, Oracle and PeopleSoft entered into negotiations at PeopleSoft's bequest "concerning the possibility of combining the applications businesses of the two companies." The discussion was "general in nature" and no valuation was discussed. But a few days later the companies concluded they couldn't come to a mutually agreeable decision, and the matter was dropped, the Oracle filing states.

On Friday, Oracle sent a letter to PeopleSoft's board of directors, telling them about the takeover bid. Oracle says the board has not yet approved the offer or otherwise commented on it as of the date of the offer to purchase.

But PeopleSoft CEO Craig Conway said in a statement Friday that the bid was "atrociously bad behavior from a company with a history of atrociously bad behavior," and characterized the offer as "a transparent attempt" to disrupt PeopleSoft's own bid to acquire J.D. Edwards.

J.D. Edwards' CEO Bob Dutkowsky, in a statement issued on Monday, said "Oracle's attempted hostile takeover of PeopleSoft in no way affects our resolve to move forward with the PeopleSoft - J.D. Edwards merger." Dutkowsky said Oracle's takeover attempt, if successful, would "eliminate at least one of Oracle's major competitors in several market spaces to the obvious detriment of customers."

Oracle said in its filing that it has $6 billion in cash on hand, more than enough to cover the terms of initial deal. But it has arranged for a $5 billion revolving credit facility with Credit Suisse First Boston, which it would also draw on to pay shareholders.


News.Commentary

PeopleSoft stakeholders should object
loudly to Oracle's saber-rattling move,
which is bound to hurt customers.


The database software giant confirmed that it intends to discontinue "the active sale of (PeopleSoft's) products to new customers."

Oracle can back out of the offer if another bid is made for PeopleSoft, the filing states. There has been much speculation that another software rival could make a bid for the company, with IBM, SAP and Microsoft all listed by industry observers as possible bidders.

If the merger is completed, Oracle will be "providing enhanced and extended support for (PeopleSoft's) products, incorporating advanced features from the Company's products into future versions of the Oracle eBusiness Suite, facilitating the migration path for the Company's customers from the Company's products to the Oracle eBusiness Suite, and substantially reducing operating expenses," Oracle states.

The merger would boost Oracle's share of the application software business, although the company would still come in second behind SAP. Oracle, the world's No. 2 software maker, makes most of its money from database software sales. Oracle said in the filing that it does not anticipate any problems with antitrust issues.

The acquisition would technically be conducted through a special purchasing firm, Pepper Acquisition, a subsidiary of Oracle.