Sun, Jul 20, 2003 - Page 11 News List

Peoplesoft's merger with J.D. Edwards may fend off Oracle


Fending off Oracle so far may have been the easy part.

As PeopleSoft took control of J.D. Edwards & Co on Friday, PeopleSoft's chief executive acknowledged that integrating the two businesses quickly might be harder than he had originally expected.

Because PeopleSoft rushed to close the deal with J.D. Edwards -- changing the initial terms to hasten its completion in an effort to make itself a less attractive takeover target to Oracle -- its merger integration plan is slightly behind schedule.

"I'll be honest with you, we didn't have as much time to work on integration planning," Craig Conway, PeopleSoft's chief executive, said in an interview yesterday. "We're scrambling."

Integrating technology companies has always been a notoriously difficult process, and any misstep by PeopleSoft is likely to be seized upon by Oracle as it continues to pursue its hostile takeover of PeopleSoft.

Still, Conway said he was confident the integration would go smoothly, even if it is delayed. He said the companies had set up "18 different working groups that have been locked away" to work on the integration.

"We got the same advisers HP used," he said excitedly, referring to the integration advisers Hewlett-Packard used in its merger with Compaq Computer, a deal that has been hailed for its integration planning.


Now that PeopleSoft has completed its deal with J.D. Edwards, it is unclear what Oracle will do next.

When it first bid for PeopleSoft, Oracle said it was not interested in buying J.D. Edwards.

Oracle later changed its position when it became clear that the PeopleSoft-J.D. Edwards deal would be completed before Oracle would have a chance to acquire PeopleSoft.

Oracle's US$6.3 billion, or US$19.50-a-share, offer appears doomed unless it can somehow persuade enough PeopleSoft shareholders to pressure the board to accept it.

As of July 11, only about 14 percent of PeopleSoft's stock had been tendered to Oracle.

PeopleSoft appears to be gaining some momentum.

On Thursday, PeopleSoft reported second-quarter earnings that beat the company's projections despite the turmoil created by Oracle's takeover bid.

The US Department of Justice extended its review of Oracle's hostile bid earlier this month, meaning the proposed deal will face substantial scrutiny on antitrust questions.

And Connecticut has sued Oracle, contending the company's proposed takeover of PeopleSoft violates the state's antitrust laws; several other states are considering similar suits.

On Friday, shares of J.D. Edwards rose US$0.05, to US$14.75, while PeopleSoft rose US$0.10, to US$18.

Oracle's shares fell US$0.01, to US$12.08.

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