07/25 - Oracle ups PeopleSoft bid to $7.5 billion - East Valley Tribune: Business

07/25 - Oracle ups PeopleSoft bid to $7.5 billion

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Posted: Friday, July 25, 2003 10:21 am | Updated: 1:16 pm, Thu Oct 6, 2011.

SAN FRANCISCO - Business software maker Oracle Corp. reaffirmed its determination to devour rival PeopleSoft Inc. Thursday, saying it's prepared to pay an extra $1.2 billion to include J.D. Edwards & Co. in the hostile takeover.

In making a series of minor changes to its unsolicited $19.50-per-share bid, Redwood Shores-based Oracle estimated it will have to spend $7.5 billion to buy PeopleSoft instead of the previous $6.3 billion price tag.

Oracle isn't paying any more per share, but will have to dig deeper into its bank account because PeopleSoft is issuing an additional 53 million shares as part of its $1.8 billion acquisition of J.D. Edwards.

When it first launched its PeopleSoft bid in early June, Oracle created a loophole that would let it rescind the offer if Denver-based J.D. Edwards became part of the package. Oracle closed that loophole in its revised bid and formally extended the offer to include J.D. Edwards.

The bid is scheduled to expire August 15, but Oracle said Thursday it will probably extend that deadline.

Thursday's move wasn't a surprise. Oracle signaled its intention to snap up J.D. Edwards last week after PeopleSoft said it had taken control of that company.

Oracle disclosed its revised offer after the markets closed Thursday. PeopleSoft's shares fell 30 cents to close at $16.55 on the Nasdaq Stock Market, then added 33 cents in extended trading. Oracle dropped 42 cents to close at $11.68 on the Nasdaq and dipped another penny in extended trading.

PeopleSoft's stock has dropped from $17.90 per share since it took control of J.D. Edwards last week, reflecting investor skepticism about Oracle's ability to pull off the deal.

Oracle, the world's second largest software company behind Microsoft, has the financial clout to pay more, with $6.5 billion in cash and a $5 billion credit line.

But Oracle faces some daunting obstacles.

The biggest challenges appear to be an antitrust review by the U.S. Department of Justice and the continuing resistance of PeopleSoft's board of directors.

Oracle remains confident it can convince regulators a takeover of PeopleSoft and J.D. Edwards wouldn't hurt the $20 billion market for business applications market. The antitrust review could still take months to complete.

PeopleSoft has already twice rejected Oracle's bid. CEO Craig Conway - a former Oracle executive - reiterated his contempt for the offer during a meeting earlier this week with J.D. Edwards employees.

If Oracle persists, PeopleSoft can resort to an antitakeover measure known as a "poison pill" to ward off its suitor. Oracle is suing in Delaware to invalidate PeopleSoft's poison pill.

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