PeopleSoft Commences J.D. Edwards Bid in Oracle's Shadow

PeopleSoft said Thursday that it has commenced its offer to buy software maker J.D. Edwards, forging ahead with the US$1.75 billion deal despite the best efforts of Oracle (Nasdaq: ORCL) to squash the merger.

PeopleSoft put its new stock-and-cash offer into effect, offering each J.D. Edwards shareholder $7.05 in cash, plus a fractional share of PeopleSoft stock. Pleasanton, California-based PeopleSoft said the deal values J.D. Edwards at $14.33 per share. The offer is set to expire July 17th.

Better Than Expected

In addition to commencing the bid -- the latest development in what has become a high-profile business soap opera with new twists each day -- PeopleSoft also revised its estimates of what the acquisition will mean to its bottom line. It now says it expects the takeover to be "significantly accretive" to its 2004 earnings per share, a more optimistic view than it previously offered.

Forrester Research analyst Bruce Temkin said the PeopleSoft bid is moving forward under a massive shadow, as a decision by Oracle to up its own bid to buy PeopleSoft will probably convince a majority of PeopleSoft shareholders to sell.

"If shareholders get excited about this new offer, it might be enough to give pause over the Edwards deal," Temkin told the E-Commerce Times. "But at this point, there is more uncertainty than anything else."

In fact, Temkin noted that PeopleSoft likely moved up its deal with Edwards in an effort to close it before Oracle's various maneuvers can take hold.

Layoffs Ahead

Temkin also said he expects Oracle will have to slash many of PeopleSoft's employees. He suggested that new opportunities will be created for firms that are willing to take over maintaining and updating PeopleSoft applications already installed at enterprises.

"We expect some of the firms in that space to start aggressively marketing their services to help calm the fears that are out there," he added.

No Thanks

PeopleSoft management has yet to formally respond to the new Oracle bid, which adds $1.2 billion to the original value of the deal, bringing it to a total of $6.3 billion. Oracle said it arrived at the new price after discussions with major PeopleSoft shareholders.

PeopleSoft's board rejected Oracle's initial offer, citing both the price and regulatory concerns. On Wednesday, Connecticut's attorney general vowed to fight Oracle's takeover of PeopleSoft on grounds that it would violate antitrust laws.