Oracle Corp.'s 18-month struggle to gain control of PeopleSoft Inc. drew to a close this morning when PeopleSoft's board agreed to a new $10.3 billion takeover offer.
After discussions throughout the weekend, the board ultimately decided to accept Oracle's sweetened offer of $26.50 per share. That figure represents an increase over what Oracle called its "best and final" cash offer of $24 per share, which it presented last month.
"After careful consideration, we believe this revised offer provides good value for PeopleSoft stockholders and represents a substantial increase in value from October," A. George "Skip" Battle, chairman of PeopleSoft's transaction committee of independent directors, said in a statement.
"Our ability to deliver this shareholder value would not have been possible without the relentless efforts of our employees," Battle said. "This has been a long, emotional struggle, and our employees have consistently performed well under the most challenging of circumstances."
Last month, a majority of PeopleSoft investors tendered their stock for $24 per share, but a "poison pill" enacted by PeopleSoft's board still stood in the way of the acquisition. The measure would dilute PeopleSoft's shares in the event of a hostile takeover, driving up the cost.
Today's deal is expected to be finalized early next month. At that point, both companies would drop their lawsuits. That includes a case in the Delaware Court of Chancery challenging the poison pill and PeopleSoft's Customer Assurance Plan, which gives new customers a refund of two to five times their license fees should PeopleSoft be acquired.
Since it first announced the takeover in June 2003, Oracle maintained it was interested in PeopleSoft's customer base. In a statement issued this morning, Oracle CEO Larry Ellison predicted the move will bolster his company's applications arm.
"This merger gives Oracle even more scale and momentum," Ellison said. "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 PeopleSoft customers who have ridden the ups and downs of the offers, counter offers, legal battles and public posturing, today's announcement at least brings a sense of finality to the saga.
"I think we're just going to have to wait and see how this turns out," said Steven Latahand, manager for PeopleSoft applications at Dartmouth-Hitchcock Medical Center in Lebanon, N.H. "The issue with Oracle now is support. How well will they support us and how soon will we have to migrate to Oracle applications?"
At Oracle's OpenWorld conference last week, Ellison pledged to "oversupport" PeopleSoft users and said his company would finish developing the next version of PeopleSoft software.
Oracle said it will enhance PeopleSoft 8 and JD Edwards 5 and develop PeopleSoft 9 and JD Edwards 6. PeopleSoft acquired J.D. Edwards & Co. just before Oracle announced its takeover plans.
Like the takeover battle itself, it will take a while for everything to sort out.
"I don't think much changes short term," said Elizabeth Roche, vice president of technology research services for Stamford, Conn.-based Meta Group. "I don't think Oracle has done the due diligence it needs to in order to find out what's going on with the future of all three apps. As usual, the biggest risk is to JDE customers."
This morning PeopleSoft shares were trading at $26.43 in pre-market activity on the Nasdaq, and Oracle shares were trading at $14.24.