Oracle, PeopleSoft Settle Takeover Battle

Oracle’s final offer represents a $2.50 per share boost to its last offering price which the Pleasonton, California-based PeopleSoft rejected as being too low (See  Oracle Bumps PeopleSoft Hostile Takeover Bid  ). PeopleSoft had rejected all five of Oracle’s bids since the first in June 2003. The bidding began at $16 and reached $26 in February before Oracle reduced its bid, citing PeopleSoft’s falling share price. P eopleSoft continued to press for more money and said it’s worth more than $31 a share to Oracle, based on calculations by the company’s directors and distributed to investors last week.

Oracle, based in Redwood Shores, California, said in a  statement posted to its Web sitethat its latest offer is good until December 28, 2004.Oracle said about 120.6 million PeopleSoft shares had already been tendered as of Friday (See Oracle Wins Tender Fight – But…   ). PeopleSoft shares closed Friday at $23.95 on the Nasdaq Stock Market.

The transaction has been approved by the boards of directors of both companies and should close by early January.

Oracle Chief Executive Officer Larry Ellison was jubilant in the Web statement both about his company’s latest financial performance and finally nailing down the PeopleSoft deal. “Today we announced both a great quarter and the agreement to acquire PeopleSoft. This merger gives Oracle even more scale and momentum,” said Ellison. “The real highlight of our most recent quarter was the 57% growth in our applications business and this merger is going to make that applications business bigger and stronger

For their part, PeopleSoft executives said it was time to end their struggle. “After careful consideration, we believe this revised offer provides good value for PeopleSoft stockholders and represents a substantial increase in value from October,” said A. George “Skip” Battle, Chairman of PeopleSoft’s Transaction Committee, in a  statement posted on PeopleSoft’s Web site . “This has been a long, emotional struggle, and our employees have consistently performed well under the most challenging of circumstances.”

Monday’s agreement brings to an end a closely followed 18-month hostile takeover bid by Oracle that included a war of combative press releases and corporate board pronouncements as well as bitterly fought litigation.The battle sparked three court cases, cost PeopleSoft CEO Craig Conway his job and took more than $1 billion in sales from PeopleSoft.  A sale also halts a legal battle in Delaware, where Oracle was trying to have PeopleSoft’s takeover defenses thrown out  (See  Oracle PeopleSoft Battle Set for Courtroom Return  ).

Oracle argued in a trial in October that a PeopleSoft rebate program and poison pill to flood the market with low-cost shares made the bid prohibitively expensive.