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Oracle Prepared to Pay $7.5B for PeopleSoft
By Clint Boulton

July 25, 2003

Despite PeopleSoft’s (Quote, Chart) closure of its purchase of J.D. Edwards, Oracle remained undeterred by reaffirming its bid to buy the rival business software company and vowing to pay as much as an extra $1.2 billion for the combined firm.

According to a Thursday filing with the Securities and Exchange Commission (SEC), Oracle (Quote, Chart) waived its stipulation that PeopleSoft not amend its merger proposal with Denver-based applications vendor J.D. Edwards, and acknowledged that a takeover of PeopleSoft would cost about $7.5 billion instead of its last estimate of $6.3 billion.

However, Oracle will still pay $19.50 per share. The extra fee stems from an additional 53 million shares PeopleSoft will issue with its $1.8 billion purchase of J.D. Edwards (Quote, Chart).

“We will need up to approximately $7.5 billion to purchase all shares pursuant to the offer and to pay related fees and expenses,” Oracle said in the SEC statement. “Neither the completion of the J.D. Edwards exchange offer nor the subsequent second-step merger will change the effectiveness of our offer. Former J.D. Edwards & Company stockholders who receive PeopleSoft, Inc. shares in either the J.D. Edwards exchange offer or in the subsequent second-step merger will be able to participate in our offer by tendering their shares in the same manner as any other PeopleSoft, Inc. stockholders.”

The company also revealed that Credit Suisse First Boston has agreed to provide a revolving credit to Oracle of as much as $5 billion.

On June 24 Redwood Shores, Calif.’s Oracle waived the condition requiring its consent for any amendment to the merger agreement between PeopleSoft and J.D. Edwards. But, in evidence that Oracle feels the PeopleSoft/J.D. Edwards deal is all but signed, sealed and delivered, Oracle removed the clause entirely.

Meanwhile, Oracle’s offer for Pleasanton, Calif.’s PeopleSoft expires August 15 and the company told the SEC that it would extend that deadline for as long as it takes to gobble PeopleSoft. Still, the antitrust specter hangs heavy, as organizations and U.S. regulatory groups like the Department of Justice scrutinize its offer for the rival.

A great deal hangs in the balance. Oracle would become the No. 2 enterprise applications company in the world to German leader SAP. As it stands now, PeopleSoft is in the second slot after acquiring J.D. Edwards.

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