PeopleSoft Inc. has announced plans to acquire competitor J.D. Edwards & Company in a stock deal valued at $1.7 billion. Together, they would be the world's second largest enterprise applications firm with 11,000 customers and 13,000 employees worldwide.
Under the terms of the agreement, J.D. Edwards would operate as a wholly owned subsidiary of PeopleSoft.
Both companies make enterprise resource planning (ERP), human resources (HR) and customer relationship management (CRM) software, but J.D. Edwards has a strong presence with midmarket manufacturing firms, something PeopleSoft lacks. PeopleSoft will extend its more robust HR capabilities to J.D. Edwards' product line, while also taking advantage of J.D. Edward's strength with shops running IBM Corp.'s iSeries platform.
The two companies have little overlap in customer bases, officials said.
"This (acquisition) gives customers more choices in hardware, more choices in operating systems, (and) more choices in databases than any enterprise software company in the market -- bar none," PeopleSoft CEO Craig Conway said in a morning conference call with analysts and reporters.
J. D. Edwards CEO Bob Dutkowsky said the merger will make a "dramatic and positive impact for shareholders, customers, partners and employees."
The companies expect that combined they will shave $80 million annually in operating expenses but that savings won't come through "changing products available today," said PeopleSoft's chief financial officer Kevin Parker. Both companies emphasized that they will maintain a strong commitment to their installed base.
Jim Shepherd, senior vice president at Boston-based AMR Research, expects the companies will maintain separate product lines and said that customers have "no reason to be worried."
"This is good for both companies and both customer bases," Shepherd said. "PeopleSoft needed manufacturing help and we felt like it would take a long time to get there organically." While still smaller than enterprise applications behemoth SAP AG, Shepherd said the combined company will be able to compete across nearly every vertical market and will have more international resources.
Today's deal is the latest in a busy acquisition period for PeopleSoft. According to the company's Web site, this marks the seventh acquisition since PeopleSoft's January 2000 buyout of Vantive Corp. helped it establish a stronger CRM footprint. Other notable deals include the January 2002 acquisition of marketing automation software vendor Annuncio Inc. and the February 2002 acquisition of product-configurator maker Calico Commerce Inc.
Conway conceded that problems have plagued other high-profile tech industry mergers, but he said those mergers didn't benefit from the "clear product synergy or talented management team" that this deal has. AMR's Shepherd added that the companies are a good cultural fit, sharing similar values and ways of dealing with customers and partners.
If approved by the Securities and Exchange Commission, the deal should be final by late in the third quarter or early in the fourth quarter, officials said.
J.D. Edwards' executive team plans to continue working with the company.
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