Oracle takeover bid kicks up a notch

Johannesburg, 19 Jun 2003

The Oracle Corporation, which originally made a $5.1 billion offer for PeopleSoft, has raised the value of its bid to around $6.3 billion.

Oracle chairman Larry Ellison said earlier that he would not go higher, but the offer was increased from $16 a share to $19.50 a share after meetings with some of PeopleSoft`s largest shareholders this week.

PeopleSoft, which is in talks to take over business software rival JD Edwards (JDE), modified its bid for JDE early this week. The bid now includes cash as well as stock, and eliminates the need for a PeopleSoft shareholder vote. Removing the shareholder vote made it more difficult for Oracle to challenge the JDE acquisition and made a PeopleSoft acquisition less attractive.

As part of its latest offer, Oracle is asking for the cancellation of the revised merger agreement between PeopleSoft and JDE, and that PeopleSoft`s shareholders be allowed to vote on the matter.

The hostile takeover bid has sparked legal action from both sides, with the US state of Connecticut also stepping in to file a suit to block the takeover.

The state government is concerned about protecting its $100 million investment in software, which is being upgraded by PeopleSoft. Its federal lawsuit, filed this week, says a takeover of PeopleSoft by Oracle would violate state and federal anti-trust laws and could have a devastating financial impact on the state if Oracle discontinued the PeopleSoft range of products.

State officials said they expect other US states to join the suit. Oracle said in response that PeopleSoft customers would not be adversely affected if the takeover were successful.

Meanwhile, Oracle has filed a lawsuit against PeopleSoft and JDE, saying the companies are trying to prevent shareholders from accepting its offer. Oracle says PeopleSoft plans to issue new stock to make its offer prohibitively expensive.

Last week, PeopleSoft and JDE tried to block the takeover by suing Oracle. The lawsuit described Oracle`s offer as a "sham" designed to destroy the company as a competitor.

PeopleSoft has also turned to some of its largest customers for help, publishing newspaper advertisements in which clients such as Toyota and Nextel Communications praise PeopleSoft.

Chicago-based Distributors and Manufacturers` User Group, which represents 300 manufacturing companies, urged PeopleSoft`s board of directors to reject Oracle`s bid.

PeopleSoft has issued a statement saying its board of directors would discuss the new offer and make a recommendation "in due course". It urged shareholders not to take any immediate action.

A PeopleSoft shareholders vote on the Oracle bid is scheduled for 7 July.