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PeopleSoft Rebuffs Oracle Again

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By LouAnn Lofton (TMF Bling)
June 20, 2003

PeopleSoft (Nasdaq: PSFT) still isn't ready to succumb to Oracle's (Nasdaq: ORCL) overtures, despite the database giant's sweetened bid. PeopleSoft's board today again rejected a takeover attempt and urged shareholders to resist Oracle's premium-priced lure.

On Wednesday, Oracle raised its bid for PeopleSoft to $6.3 billion from $5.1 billion. Per share, the bid jumped from $16 to $19.50. PeopleSoft's shares are trading today at around $17.50.

However, PeopleSoft's board said that Oracle's offer still undervalues the business and its future potential, particularly given the (hopefully) soon-to-close J.D. Edwards (Nasdaq: JDEC) acquisition. PeopleSoft improved upon its own offer for J.D. Edwards on Thursday, in the hopes of sealing that deal faster. That could help it thwart Oracle's advances.

PeopleSoft also pointed again to antitrust issues as one of its reasons for refusing Oracle. Connecticut's attorney general filed suit this week to block Oracle's takeover of PeopleSoft, citing increased costs to the state and anticompetitive concerns with the acquisition. Whether or not federal regulators would indeed throw up roadblocks isn't a sure thing since the biggest player in the field is the German company SAP (NYSE: SAP).

Meanwhile, as this little melodrama continues to play out, SAP is sitting on the sidelines, smacking its chops and smiling. It will likely gain new customers as the uncertainty of PeopleSoft's future makes business software buyers nervous. Faced with the thought of being forced to eventually move to Oracle's products, many may choose to shift their systems over to SAP now. The company has already launched an ad campaign to woo those very customers.

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