PeopleSoft backs down

By Carel Alberts for PeopleSoft

Johannesburg, 11 Jun 2003

Oracle, the world`s second largest software manufacturer, has announced that its takeover target, PeopleSoft, has backed off from a legal threat to block Oracle`s proposed $5.1 billion takeover.

The announcement is the latest move in a series of events that began with the announcement that PeopleSoft was in talks to take over JD Edwards. PeopleSoft`s purchase of JD Edwards, a stock deal valued at $1.85 billion, would allow it to overtake Oracle in the market for business applications such as accounting, purchasing and human resources.

Oracle then announced a $5.1 billion bid to take over PeopleSoft, to which PeopleSoft responded with a threat of legal action.

After receiving PeopleSoft`s notice, Oracle chairman Larry Ellison sent a letter to PeopleSoft president Craig Conway, urging the companies to meet in the boardroom instead of the courtroom. Company spokespersons added: "We have made an all-cash, fully financed offer to the PeopleSoft shareholders. We believe that the PeopleSoft board can best serve those shareholders by recommending acceptance of our offer."

Oracle said in its latest statement that PeopleSoft had decided not to commence litigation against Oracle and cancelled its plan to appear in court.

Oracle has not said whether it would seek to acquire JD Edwards. However, its bid is one of the biggest hostile takeover bids to rock the software industry since International Business Machines bought e-mail provider Lotus Development in what began as an unfriendly, unsolicited bid in 1995.

The deal, which would be Oracle`s largest acquisition by far, could also be a harbinger of increased consolidation in the software market as executives try to win customers amid dwindling corporate spending on new technology.

The PeopleSoft board will review the hostile bid and make its recommendation to shareholders by 20 June, PeopleSoft spokesman Steve Swasey said.

Meanwhile, customer angst is reported to be running so high that SAP - the leader in PeopleSoft`s and JD Edwards` market - is launching an advertising campaign in major newspapers to promote its software as a reliable alternative.