Oracle Corp. has announced its intention to make a takeover bid for PeopleSoft Inc. and on Monday will officially offer PeopleSoft investors $16 per share.
The proposed $5.1 billion deal -- subject to approval from PeopleSoft shareholders -- culminates a crazy week in the enterprise applications market that began with PeopleSoft announcing it would acquire rival J.D. Edwards & Co. Oracle has now thrown those plans up in the air.
In an early morning teleconference, Oracle CEO Larry Ellison said he intends to merge PeopleSoft's development team with Oracle's and eventually move all PeopleSoft business applications customers to Oracle software.
Ellison, however, said Oracle did not plan to "push PeopleSoft customers to move" but would instead consult with them to devise an appropriate timetable for support.
There was no immediate comment from the Pleasanton, Calif.-based PeopleSoft.
Ellison said most PeopleSoft customers are currently running on an Oracle database, allowing Oracle to immediately offer "one-stop support." He added that Oracle plans to extend the support period for PeopleSoft 7 beyond the end-of-the-calendar-year deadline that PeopleSoft has imposed. Oracle's plans call for moving the PeopleSoft support team into the larger Oracle support organization and utilizing them as PeopleSoft product specialists.
Redwood Shores, Calif.-based Oracle would also allow customers to move from PeopleSoft 7 to either PeopleSoft 8 or its own Oracle E-Business Suite without facing additional licensing fees.
Ellison said a group of PeopleSoft developers would continue to make improvements in PeopleSoft products and vowed that "if customers elect to stay on PeopleSoft products, we will keep those current."
The remaining PeopleSoft development team would merge with Oracle E-Business developers, creating a combined pool of 5,000 to 6,000 developers working on Oracle business software.
The effect this takeover bid has on PeopleSoft's plans to acquire Denver-based J.D. Edwards, the midmarket ERP vendor with strong manufacturing expertise, remains unclear.
On Monday, PeopleSoft announced its plans to acquire J.D. Edwards in a $1.7 billion stock deal. Ellison called that a "risky merger" and said Oracle's bid is "a much safer road for the PeopleSoft shareholder."
Michael Doane, vice president at Stamford, Conn.-based Meta Group, said it's unlikely Oracle would be interested in also acquiring J.D. Edwards.
"Oracle will probably reconsider the J.D. Edwards deal, if they are successful in buying PeopleSoft," he said. "I would bet that the J.D. Edwards acquisition is cut out of the picture -- and that's good for customers." He added it's ultimately better for J.D. Edwards and its customers if it keeps its current management team in place.
Ellison said PeopleSoft CEO Craig Conway first approached him one year ago with the idea of merging the two companies' applications businesses into a newly created business. Ellison said he declined that offer but that now "we felt the time was right."
Oracle products overlap greatly with PeopleSoft's offerings, as do the markets it serves. Both companies have heavy penetration in industries like financial services and telecommunications.
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