Oracle Ups Offer For PeopleSoft

Business software maker Oracle Corp. raised its hostile takeover bid for rival PeopleSoft Inc. by 33 percent to $26 per share Wednesday, setting the stage for more high-stakes drama in the high-tech soap opera.

The all-cash offer, which values PeopleSoft at $9.4 billion, tops Oracle's previous bid of $19.50 per share. The new offer is a 19 percent premium from PeopleSoft's closing price Tuesday of $21.89 on the Nasdaq Stock Market.

It's also 84 percent higher than the initial offer, reports CBS MarketWatch.

Oracle also said it was extending the expiration of its tender offer to midnight on March 12 from Feb. 13.

Oracle is betting the new bid will be win over PeopleSoft's major stockholders and pressure PeopleSoft's board to drop its staunch resistance to the offer, transforming what has been a hostile battle into friendly negotiation.

"This is our final price," Oracle Chairman Jeff Henley said Wednesday. "We urge PeopleSoft's directors to seriously consider our offer and put the interests of their stockholders first."

PeopleSoft spokesman Steve Swasey said early Wednesday the company had no comment Oracle's new offer.

Even if PeopleSoft relents, the deal still will need to win antitrust approval.

The U.S. Justice Department is nearing the end of an extensive antitrust review of the deal but it's unclear whether the Bush administration will give the go-ahead for the takeover or what conditions it might impose, if any. Oracle said Wednesday that it expects the Justice Department to reach a decision by March 12.

The new bid marks the second time Redwood Shores-based Oracle has raised its price since it first offered $16 per share for Pleasanton-based PeopleSoft nearly eight months ago.

It's the latest salvo in a Silicon Valley showdown that has pitted two of the software industry's fiercest rivals. The animosity has been punctuated by the barbed remarks of the two companies' outspoken chief executives, Oracle's Larry Ellison and his former subordinate, PeopleSoft's Craig Conway.

Oracle's higher bid had been widely expected, but the timing comes as a mild surprise.

Analysts have been predicting for months that Oracle would have to raise the stakes with PeopleSoft's stock consistently trading above $19.50 per share since October.

But Oracle executives had indicated the company wouldn't re-evaluate the price until antitrust regulators finished its analysis on how the deal would change the $20 billion market for business applications software — the computer coding that automates a wide range of administrative jobs.

European regulators also are conducting an antitrust review and a group of state attorneys general are mulling a possible challenge. The European review is scheduled to be completed by April 21.

PeopleSoft's board already has twice rejected Oracle's offer, maintaining the Pleasanton-based company can become more valuable by capitalizing on its recently completed $2 billion acquisition of J.D. Edwards & Co.

Oracle, though, has depicted PeopleSoft as a struggling company destined to die unless it submits to a takeover.

But PeopleSoft so far has defied Oracle's gloomy predictions, delivering software sales and savings from the J.D. Edwards deal that have pleased investors. The better-than-expected results have helped lift PeopleSoft's stock, which reached its 52-week high of $24.04 less than a month ago.

PeopleSoft lost some of its luster last week when management provided a lukewarm forecast for the first quarter. PeopleSoft also threw a curve at Oracle last week by scheduling a pivotal election to determine its board of directors for March 25 — about two months earlier than anticipated.

Oracle has nominated five alternative directors to in effort to gain majority control of PeopleSoft's board. PeopleSoft is asking its shareholders to re-elect four incumbent directors that have already joined in the unanimous votes rejecting Oracle's bid. The looming proxy battle could become a moot point with Oracle's sweetened offer.