PeopleSoft accepts Oracle's $10.3bn offer

PeopleSoft finally agreed yesterday to a sweetened $10.3 billion (€7.73 billion) offer from Oracle, the database software giant, ending an often bitter 18-month battle by the business software group to remain independent.

Oracle's raised offer of $26.50 per share was approved by both companies' boards. Oracle had said its previous bid of $24 a share was its best and final offer but agreed to raise the offer to overcome objections from PeopleSoft's shareholders and directors.

Oracle is one of the biggest multinational software companies based in the Republic, where it employs more than 900 people.

It has a European headquarters based at East Point Business Park, which performs a range of functions including finance and customer support.

It recently said that it would set up a new consulting division in Dublin.

However, PeopleSoft does not have any substantial Irish operations with most of its sales being managed out of Britain.

This should mean there will be less chance of post-merger redundancies at Oracle's Irish operations.

The deal, which is expected to close by early January, represents a victory for Mr Larry Ellison, Oracle's founder and chief executive.

The deal will also enable Oracle to expand its business applications software arm and consolidate the California-based company as the second largest software vendor after Microsoft.

"This merger gives Oracle even more scale and momentum," said Mr Ellison.

He also added that he expected the deal to enhance group earnings by 1 cent in the fourth quarter of the current year, by about 2 cents a quarter, or 8 cents per year in fiscal 2006 and a bit more in 2007.

Oracle, which currently gets 80 per cent of its revenues from database software sales, will become the second-largest applications software group behind Germany's SAP.

Oracle and PeopleSoft together have around 25 per cent of the market for business applications software while SAP has a 39 per cent share.

Oracle's pursuit began in June 2003 with an offer of $16 a share, or about $5.1 billion, when PeopleSoft shares were trading at $15.11.

Mr Ellison won European Union approval for the deal in October and since then 61 per cent of PeopleSoft holders have tendered their shares.

PeopleSoft had rejected five Oracle takeover bids, maintaining that Oracle's last offer of $24 a share did not value the company fairly.

The battle had been set to continue today at a court hearing in Delaware.

But yesterday, PeopleSoft said the revised offer provided "good value for PeopleSoft stockholders".

Oracle revealed second-quarter results yesterday. The company said net income rose to $815 million, or 16 cents per share, from $617 million, or 12 cents per share, in the same quarter last year.

Revenues increased 10 per cent to $2.76 billion and software revenue jumped 13 per cent to $2.22 billion. - (Financial Times Service)