Oracle Dangles the Bait

Oracle chief financial officer Jeff Henley said that the company’s

management decided to increase its cash offer to $19.50 a share from $16 a share

after meeting PeopleSoft’s largest shareholders.

Meanwhile, SAP is trying to take advantage of the uncertainty prevailing

among J D Edwards and PeopleSoft customers. The German software maker has

launched an aggressive print advertising campaign on a global scale to tempt

rivals J D Edwards and PeopleSoft’s clients to switch to SAP. The campaign

comes barely a fortnight after Oracle’s $5.1 billion hostile bid to acquire

PeopleSoft, which rebuffed the bid.

Even in India, SAP is mounting an aggressive campaign to offer "a few

words of comfort for customers of PeopleSoft and J D Edwards". The

advertisement also promises prospective clients "a customized

proposal" based on the value of their previous PeopleSoft or J D Edwards

investment.

PeopleSoft, on the other hand, has decided to hasten the J D Edwards deal by

offering $14.33 for each J D Edwards share for a total of about $1.75 billion.

The proposed deal now amounts to $863 million in cash and $52.6 million in newly

issued PeopleSoft shares. J D Edwards’ stockholders can choose between cash

and PeopleSoft stock. The earlier offer was all stock.

By making it a half cash and half stock offer, PeopleSoft has made it tougher

for Oracle to challenge the J D Edwards acquisition as PeopleSoft does not have

to take the issue to its shareholders for a vote as per NASDAQ rules. Also, the

deal would deplete PeopleSoft’s cash reserves, which according to conventional

wisdom would make it a less attractive target for Oracle.

In an effort to stop sales from slowing, PeopleSoft is reportedly offering

money back guarantees to new clients though the company has made no confirmation

to this affect so far.

TV Mahalingam in Bangalore