Oracle buys Peoplesoft...

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Oracle Buys PeopleSoft
Oracle and PeopleSoft Sign Definitive Merger Agreement

Redwood Shores, Calif., December 13, 2004 - Oracle Corporation today announced that it has signed a definitive merger agreement to acquire PeopleSoft, Inc., for $26.50 per share (approximately $10.3 billion). The transaction has been approved by the boards of directors of both companies and should close by early January.

“Today we announced both a great quarter and the agreement to acquire PeopleSoft. This merger gives Oracle even more scale and momentum,” said Oracle Chief Executive Officer Larry Ellison. "The real highlight of our most recent quarter was the 57 percent growth in our applications business, and this merger is going to make that applications business bigger and stronger.

"On an adjusted pro forma basis, we expect this merger to be one cent accretive in Q4 of this year (FY05), about two cents a quarter or eight cents per year, in FY06, and a bit more in FY07.

“This merger works because we will have more customers, which increases our ability to invest more in applications development and support. We intend to enhance PeopleSoft 8 and develop a PeopleSoft 9 and enhance a JD Edwards 5 and develop a JD Edwards 6. We intend to immediately extend and improve support for existing JD Edwards and PeopleSoft customers worldwide.”

Oracle is amending its current tender offer for all outstanding shares of PeopleSoft to expire at midnight, New York City time, on December 28, 2004. As of the close of business on Friday, December 10, 2004, approximately 120,600,093 shares had been tendered in and not withdrawn from the offer.

Reactions???

2

Great news for Oracle. Bad news of some employees of both the comapnies. We will be looking at some huge Layoffs.
Watch out SAP !!!

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:bhangra:

My ORACLE stocks are rising.

:bhangra:

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Its about time. Cheers to yet another monopoly.

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[QUOTE]
*Originally posted by fair_&_balance: *
Great news for Oracle. Bad news of some employees of both the comapnies. We will be looking at some huge Layoffs.
Watch out SAP !!!
[/QUOTE]

SAP has benefited the most for the past 6 months because of this uncertainity.

People will buy more SAP- HR as they are not sure of Peoplesoft .

SAP has already displaced Siebel as the CRM leader.

Way to go SAP !!!

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[QUOTE]
*Originally posted by nicols_john: *

SAP has benefited the most for the past 6 months because of this uncertainity.

People will buy more SAP- HR as they are not sure of Peoplesoft .

SAP has already displaced Siebel as the CRM leader.

Way to go SAP !!!
[/QUOTE]

I was talking its effect in long run. Yes..in short term SAP will benefit and is benefitting.
Next oracle target is any of 3...
BEA System
Business Object
SEIBEL

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:bhangra: mine too !!!

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Oracle up $1.24 to $14.52 today.

Close to its year high of $ 15.51.

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[QUOTE]
*Originally posted by ehsan: *
Oracle up $1.24 to $14.52 today.

Close to its year high of $ 15.51.
[/QUOTE]

Time to offload some.

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And now down to 14.06 :(

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just less than a year ago People Soft had acquired JD Edwards.. so it’s all the way downhill for them.. now that Oracle is the owner they’'ll make sure they’ll give that application the porper burial it deserves..

Interestingly enough.. PeopleSoft had just entered into a ‘partnership’ with IBM to bundle their apps on IBM servers… with Oracle in charge.. i guess that’s not happening anymore :hehe:

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Re: Oracle buys Peoplesoft…

Here is the aftershock…

http://money.cnn.com/2005/01/14/technology/oracle.reut/index.htm?cnn=yes
SAN FRANCISCO (Reuters) - Oracle Corp. will cut 5,000 jobs as it combines with PeopleSoft Inc., the business software rival it acquired for $10.3 billion after a bitterly fought takeover battle.

The cuts, which were in line with Wall Street expectations, represent about 9 percent of the companies’ combined work force of 50,000 people. Financial terms, including any charges or cost savings, were not disclosed.

In a statement, Oracle pledged to keep more than 90 percent of PeopleSoft’s product development and support employees, implying that most of the cuts would hit administrative and marketing positions made redundant after the deal closed last Friday.

The ongoing support of PeopleSoft products – used by companies to manage payroll, human resources and manufacturing operations – was a point of contention during the takeover battle, with many high-profile customers fearing Oracle would drop support for PeopleSoft products altogether.

“Oracle will have the resources to deliver on the development and support commitments we have made to PeopleSoft customers over the last 18 months,” Oracle CEO Lawrence Ellison said in a statement, describing specific plans to develop new versions of PeopleSoft software.

Notifications of the job cuts began Friday and the majority will be completed over the next 10 days, Oracle said in a statement. Further details on the integration plans will be given next week, it said.

Shares of Oracle (Research) rose 15 cents, or 1.1 percent, to $13.63 on Nasdaq. In after-hours trading, its shares were unchanged.

Marked by heated courtroom battles and the ouster of PeopleSoft’s chief executive, the 18-month takeover saga finally concluded after Oracle sweetened its offer and won regulatory approval for the deal.

The deal gives Oracle the heft to compete against SAP AG, its European rival in business planning software, but also presents technical challenges as the company works to create a combined Oracle-PeopleSoft software package, said Clark Chang, an analyst with Fulcrum Global Partners.

“The real revenue synergy of this acquisition happens when the combined version comes out in about three years from now,” Chang said.

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Re: Oracle buys Peoplesoft...

SAP has had a fun time in the last 18 months, increasing their market share both in US as well as internationally. Oracle is basically in a threesome mode right now, having to integrate PeopleSoft as well as JD Edwards. Once its done with this, it will come after SAP. If it ever gets to that, it will be a fun fight.

Merging very diverse companies is not a fun activity. I am still intrigued by how Pricewaterhouse and Coopers were able to pull it off. HP and Compaq did a pretty reasonable effort not so long ago. Pharma companies usually have a better time (as they did in 90's) merging.

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Re: Oracle buys Peoplesoft...

Faisal, the answer lies in three things...
1) Speed of integration
2) Divestment of non strategic assets
3) Ability to leverage consolidated cash position

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Re: Oracle buys Peoplesoft...

Yes thats academic. Whats really critical is how much synergies are achieved to get some real cost-savings on board. Oracle will be supporting PeopleSoft products atleast till 2013. Don't know how long they will support JD Edwards. Thats going to be a drain.

Does anyone know whatever happened to the "poison pill"? Did the courts struck it down? I don't remember reading anything about it.

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Re: Oracle buys Peoplesoft...

Nah yaar, synergies are the reason you do an acquisition. It is not the result of a transaction. WHen making the tender offer, you would have already figured out the IRR from the consolidation to come up with the pricing.

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Re: Oracle buys Peoplesoft...

Yeah.... thats what I am saying... that they'll have to make sure their original assumptions of IRR hold true, when they actually merge the businesses. Since this was practically a hostile take-over, so obviously Oracle did not had access to a lot of confidential information that would have made initial IRR calcs more reliable. Compare that to, maybe, an HP-Compaq merger where most relevant info is shared, before a price tag is decided.

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SAP spoils Oracle party

http://www.amrresearch.com/Content/View.asp?pmillid=17943

SAP Versus Oracle: The Gloves Are Off
Thursday, January 20, 2005
Jim Shepherd

Only hours after Oracle announced its plans for the combined Oracle-PeopleSoft business (see the AMR Research Alert article “The Fusion of Oracle and PeopleSoft Apps”), SAP, the enterprise applications market leader, stepped in to spoil the party. The company stunned the industry with news it would offer support and maintenance for the PeopleSoft and J.D. Edwards applications. To provide this service, SAP has acquired Texas-based third-party maintenance firm TomorrowNow, which had received considerable attention in the last few months by offering low-cost support contracts to PeopleSoft customers. (See the AMR Research Alert article “TomorrowNow Rolls Out Third-Party Maintenance for Former J.D. Edwards Products” for more on this.)

The Bottom Line: While we are certainly not surprised that SAP would offer software license credit and conversion assistance to PeopleSoft customers, the additional step of providing long-term support and maintenance for another vendor’s products is unprecedented. This is particularly surprising coming from the normally conservative SAP, which rarely makes acquisitions or directly combative gestures.

What It Means: AMR Research is generally very skeptical when application vendors announce programs to lure away customers after an acquisition. Just last week, we had dismissed Microsoft Business Solutions’ (MBS) offer of license and maintenance credits to the PeopleSoft base as being unlikely to generate much response (see the AMR Research Alert article “Microsoft (and Others) Are Eyeing Oracle’s Prize”). However, in SAP’s case, its Safe Passage program changes the rules by providing a support contract for the current applications while the customer migrates to SAP’s products. SAP also indicated that at least initially it is targeting the “approximately 2,000 companies” that currently own SAP and PeopleSoft applications. These companies are certainly the most likely candidates to be interested in this offer since many of them have probably considered consolidating Enterprise Resource Planning (ERP) vendors already. This is also a group of customers that SAP would like to protect from any additional penetration by Oracle.

The Targets: SAP believes that there are two types of customers that will find the Safe Passage program attractive. Those in one group have PeopleSoft HR in place, but they are using SAP applications for financials among many other functions. The other group tends to be large manufacturing companies that have SAP at headquarters, but are still using J.D. Edwards applications in many plants and divisions. In most cases, SAP was selected long after the PeopleSoft or J.D. Edwards products, and there is already a plan to eventually standardize on SAP. These companies may find the vendor consolidation opportunity and license trade-in credit very attractive, even if they are in no rush to migrate.

How It Works: Companies that want to take advantage of Safe Passage have to trade in their PeopleSoft or J.D. Edwards licenses for mySAP ERP licenses. They will receive a credit equal to 75% of the license price that they paid, but they will have to pay the difference between that price and the current mySAP license fee. They will be charged a maintenance fee based on 17% of the total mySAP license value, but it will cover the support of their PeopleSoft or J.D. Edwards products. The customer is then free to continue to use their current applications, begin migration immediately, or use SAP’s NetWeaver product to build integration or extensions for the combined products.

Conclusion: This move creates an additional option for customers that is certainly worth considering. In some cases, it may fit well with the company’s IT strategy and result in substantial license discounts. Other customers may not be interested in switching to mySAP right now, but they may want to investigate a maintenance contract with TomorrowNow to see how it compares to Oracle’s. Between Oracle’s news yesterday and SAP’s today, the former PeopleSoft customers are getting lots of attention and some very attractive choices. There is no question that this battle between Oracle and SAP promises to give companies considerable negotiating leverage, which may be the best companies can hope for when their vendor is acquired.