PeopleSoft agrees to $10.3 billion Oracle bid at last

The Oracle Corporation announced on Monday that it would acquire PeopleSoft Inc for $10.3 billion, ending a bitter standoff that had lasted ...

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The Oracle Corporation announced on Monday that it would acquire PeopleSoft Inc for $10.3 billion, ending a bitter standoff that had lasted more than 18 months and making Oracle the largest application software company in the United States.

Oracle, based in Redwood City, California, increased its offer to $26.50 a share, only a month after insisting that $24 a share remained its ‘‘best and final’’ bid.

The merger brings to an end often-bitter battling between two of Silicon Valley’s largest and most colourful companies. Oracle and PeopleSoft are competitors in providing software that large companies use to manage critical business functions like human resources, accounting and inventory management.

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PeopleSoft’s acquisition of J.D.Edwards in August 2003 bumped Oracle from second to third place in that market. SAP, of Germany, is the market leader. ‘‘Today we announced both a great quarter and the agreement to acquire People Soft,’’ Oracle’s chief executive, Lawrence Ellison, said. ‘‘This merger gives Oracle even more scale and momentum.’’

He added: ‘‘The real highlight of our most recent quarter was the 57 per cent growth in our applications business, and this merger is going to make that applications business bigger and stronger.’’

PeopleSoft’s directors contacted Oracle over the weekend to open serious negotiations for the first time, the companies said. Ellison said it was only after seeing PeopleSoft’s books for the first time that Oracle decided to raise its offer. PeopleSoft’s revenue from maintenance fees was higher than Oracle had assumed, based on what little it knew from publicly available data. ‘‘It was a more profitable business than we had thought,’’ Ellison said.

‘‘This has been a long, emotional struggle,’’ said George Battle, a PeopleSoft director who led the negotiations with Oracle. ‘‘The board salutes our employees for their outstanding dedication to PeopleSoft.’’

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An analyst with the investment firm Sanford Bernstein, Charles DiBona, said he was unconvinced by Oracle’s explanation for its willingness to raise its offer for Peoplesoft shares. ‘‘They’re saying they got a closer look at the numbers and feel more comfortable, but I’m sceptical,’’ he said.’’

The fate of PeopleSoft’s roughly 12,000 employees was unclear today. Last summer Oracle disclosed it would fire more than 6,000 PeopleSoft workers after the merger, but in recent months Oracle executives said the number would probably not be as high as they originally thought. —NYT