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Oracle Reaches Takeover Deal With PeopleSoft

Boards Approve $10.3 Billion Purchase

By Ariana Eunjung Cha
Washington Post Staff Writer
Tuesday, December 14, 2004; Page E01

SAN FRANCISCO, Dec. 13 -- Software maker PeopleSoft Inc. announced Monday that it had agreed to be acquired by Oracle Corp. in a $10.3 billion deal, ending one of the longest and nastiest takeover battles in recent corporate history.

In the past 18 months, PeopleSoft's board had rejected five previous bids, but it said in a statement Monday that Oracle's latest proposal "provides good value." Oracle said it would pay $26.50 per share -- $10.50 per share more than what it initially bid and $2.50 more than what it called its best and final offer just a few weeks ago.

PeopleSoft, based in a quiet suburb east of San Francisco, engaged in a war of words with Oracle and its chief executive, Lawrence J. Ellison. (Noah Berger -- AP)

A Long Journey/Market Share
_____Recent Coverage_____
Oracle's PeopleSoft Bid Deadline Nears (The Washington Post, Nov 19, 2004)
Oracle's PeopleSoft Bid Rises $3 a Share (The Washington Post, Nov 2, 2004)
E.U. Regulators Clear Oracle's Takeover Bid (The Washington Post, Oct 27, 2004)
Judge Clears Oracle's Bid For Rival (The Washington Post, Sep 10, 2004)
Acquisitions Essential, Oracle CEO Asserts (The Washington Post, Jul 1, 2004)
_____On the Web_____
Oracle Press Release
PeopleSoft Press Release
Oracle Stock Quote/Company Information
PeopleSoft Stock Quote/Company Information

"This has been a long, emotional struggle," said A. George "Skip" Battle, the Ask Jeeves Inc. chairman who headed the PeopleSoft committee negotiating with Oracle.

Lawrence J. Ellison, founder and chairman of Oracle, the database powerhouse, has been eager to acquire PeopleSoft, which specializes in personnel management systems for companies, to better compete against German software giant SAP AG. The merger would create a software behemoth with nearly 54,000 employees and 23,000 customers. SAP has 39 percent of the market for software that automates administrative tasks while a combined PeopleSoft and Oracle would have 25 percent.

News of the transaction, which also has been approved by Oracle's board and is slated to close in January, boosted shares of both companies. PeopleSoft climbed over 10 percent to $26.42, and Oracle jumped a similar percentage to close at $14.63 in trading Monday.

Ellison said this morning that PeopleSoft officials approached him over the past few days to see if they could agree on a price for the merger. A deal was reached late Sunday. "We thought there was real value in doing a friendly deal," Ellison said.

The feud, at one point or another, involved the Justice Department, which unsuccessfully objected to a merger, and the European Union, which allowed it. There was also a court fight in Delaware. Oracle had challenged a "poison pill" provision in PeopleSoft's bylaws that would have made a takeover prohibitively expensive even though a majority of PeopleSoft shareholders tendered their shares to Oracle.

The takeover attempt cut into both companies' bottom lines. PeopleSoft has said it cost the company more than $1 billion in sales. Ellison in recent weeks has been preparing to mount an expensive proxy fight to stack PeopleSoft's board of directors with people who favored the merger.

It was the bitter name-calling, however, that made the battle into a Silicon Valley spectacle. Early on, PeopleSoft's then-chief executive Craig A. Conway called Ellison's bid "diabolical" and "sociopathic," comparing him to Mongol warrior Genghis Khan. Ellison later told Wall Street analysts, "If Craig and the dog were standing next to each other, trust me -- I have one bullet -- it wouldn't be for the dog."

In many respects, the trouble between PeopleSoft and Oracle represented a clash of cultures. Oracle reflects Ellison's showy and ruthless style. Oracle's shimmery cluster of silver skyscrapers in Redwood Shores along California's Highway 101 are a Silicon Valley landmark. PeopleSoft is based in the quiet, nondescript San Francisco suburb of Pleasanton, and many of its employees regard themselves as one big family.

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