Oracle Corp. raised the price of its cash offer for PeopleSoft Inc. this morning to $26 per share, increasing the
total value of its hostile takeover bid to roughly $9.4 billion.
The revised offer is 18.8% higher than PeopleSoft's closing stock price on Tuesday. This is the second time that Oracle has upped the ante for PeopleSoft shares. Its original bid, launched in June, was $16 per share. About two weeks later, it sweetened the deal to $19.50.
Oracle's chairman and CFO, Jeff Henley, called today's offer the "final price" and in a statement urged PeopleSoft investors to accept it.
"Given PeopleSoft's current prospects, including its recent downward revisions to earnings guidance for the first quarter, we believe our offer presents compelling value to PeopleSoft's stockholders," Henley said.
There was no immediate response from PeopleSoft.
"The bottom line is Oracle needs PeopleSoft at a higher price than it's really worth," said Eugene Walton, a financial analyst with Walton Holdings in New York. "It's no longer based on fundamentals; it's based now on how desperate Oracle is to get those customers and grow their revenue stream."
Oracle's offer is still contingent on a green light from antitrust authorities. The Department of Justice is expected to weigh in before Oracle's offer expires March 12.
"We believe this acquisition is pro-competitive, will benefit the customers of both companies, and will make Oracle an even more profitable company," Oracle CEO Larry Ellison said in a release. He also vowed to offer enhanced support to current PeopleSoft customers.
The takeover wrangling has also led to a proxy battle. Oracle has nominated five candidates for PeopleSoft's board of directors and has put forth a stockholder proposal to increase the size of PeopleSoft's board from eight members to nine.
PeopleSoft investors are scheduled to meet March 25 to elect a board. PeopleSoft is proposing a separate slate of candidates.
Steve Bonadio, senior program director at Stamford, Conn.-based Meta Group, called the amended offer "a pretty sweet premium for investors" but said it's "not the most reassuring news" for PeopleSoft customers. Oracle would be faced with the prospect of maintaining PeopleSoft's enterprise software line, as well as supporting the midmarket and iSeries-based application sets that PeopleSoft inherited after last year's acquisition of J.D. Edwards & Co.
"They would have no choice but to consolidate around a simpler portfolio of applications," he said.
News writer Barney Beal contributed to this report.
FOR MORE INFORMATION:
Timeline: Following the acquisitions trail