Ending 18 months of bad blood, Oracle Corp raised its takeover bid for bitter rival PeopleSoft Inc by 10 percent to seal a US$10.3 billion deal that will create the world's second largest maker of business applications software.
The agreement, announced on Monday, caps a rancorous Silicon Valley feud marked by churlish exchanges between the companies' management teams and colorful courtroom battles.
Redwood Shores-based Oracle brought an end to the hostilities by sweetening its all-cash offer to US$26.50 per share, up from a US$24 bid that PeopleSoft's board had rejected as inadequate. The final offer represents a 75 percent premium from PeopleSoft's market value before Oracle launched the takeover battle in June last year.
"A lot of people compared us to Don Quixote tilting at windmills, but finally we now have PeopleSoft," Oracle CEO Larry Ellison said during an interview Monday. "Clearly, it's a great feeling. It's not that I wanted to win just for the sake of winning. It's the fact that PeopleSoft is instrumental to our strategy."
The resolution pleased investors. PeopleSoft's shares surged US$2.47, or 10.3 percent, to US$26.42 during Monday's trading on the NASDAQ Stock Market, where Oracle's shares gained US$1.25, or 9.4 percent, to US$14.53.
By picking up 12,750 PeopleSoft customers and nearly US$3 billion in annual revenue, Oracle hopes to mount a more serious challenge to German software maker SAP's leadership in business applications software -- the computer coding that automates a wide range of administrative tasks.
After completing the takeover next month, Oracle expects the PeopleSoft acquisition to boost its earnings by about US$400 million, or US$0.08 per share, during the fiscal year ending in May 2006.
"This is a coup for Oracle," AMR Research analyst Jim Shepherd said. "While there were other acquisitions that interested them, none could do for them what this will do."
Oracle eventually hopes to buy other technology companies, but won't consider any other large acquisitions until PeopleSoft is fully digested, Ellison said.
The fate of PeopleSoft's roughly 12,000 employees remains unclear. Oracle at one point drew up plans to fire more than 6,000 PeopleSoft workers, but the company recently has indicated that the purge might not be as dramatic as management originally envisioned.
"It's still going to be bloody for PeopleSoft employees," predicted Garban Institutional Equities analyst Richard Williams.
Keeping PeopleSoft's employees happy won't be as important to Oracle as pleasing most of the customers that it will inherit, Shepherd said.
For the deal to make financial sense, Oracle needs to keep collecting a steady stream of revenue for maintaining and upgrading the software of PeopleSoft customers. Some PeopleSoft customers have expressed serious reservations about the deal, threatening to either defect to SAP or another company specializing in software support.
Oracle hopes to ease the customer concerns by continuing to develop new PeopleSoft products within a separate division of the merged company.
"We are going to make heavy investments to keep those customers happy," Ellison said.
PeopleSoft provided Oracle extra incentive by offering unusual guarantees as it tried to fend off the takeover. The guarantees could force Oracle to refund up to US$2.4 billion to PeopleSoft customers if product support diminishes. Oracle doesn't expect to trigger the refund clauses.
To get the deal done, Oracle also had to overcome the US Department of Justice, which sought to block the deal because it believed the merger would drive up software prices and diminish product innovation.
A federal judge rejected the government's antitrust claims three months ago, removing one of PeopleSoft's strongest takeover defenses.
Nvidia Corp yesterday unveiled its new high-speed interconnect technology, NVLink Fusion, with Taiwanese application-specific IC (ASIC) designers Alchip Technologies Ltd (世芯) and MediaTek Inc (聯發科) among the first to adopt the technology to help build semi-custom artificial intelligence (AI) infrastructure for hyperscalers. Nvidia has opened its technology to outside users, as hyperscalers and cloud service providers are building their own cost-effective AI chips, or accelerators, used in AI servers by leveraging ASIC firms’ designing capabilities to reduce their dependence on Nvidia. Previously, NVLink technology was only available for Nvidia’s own AI platform. “NVLink Fusion opens Nvidia’s AI platform and rich ecosystem for
WARNING: From Jan. 1 last year to the end of last month, 89 Taiwanese have gone missing or been detained in China, the MAC said, urging people to carefully consider travel to China Lax enforcement had made virtually moot regulations banning civil servants from making unauthorized visits to China, the Control Yuan said yesterday. Several agencies allowed personnel to travel to China after they submitted explanations for the trip written using artificial intelligence or provided no reason at all, the Control Yuan said in a statement, following an investigation headed by Control Yuan member Lin Wen-cheng (林文程). The probe identified 318 civil servants who traveled to China without permission in the past 10 years, but the true number could be close to 1,000, the Control Yuan said. The public employees investigated were not engaged in national
ALL TOGETHER: Only by including Taiwan can the WHA fully exemplify its commitment to ‘One World for Health,’ the representative offices of eight nations in Taiwan said The representative offices in Taiwan of eight nations yesterday issued a joint statement reiterating their support for Taiwan’s meaningful engagement with the WHO and for Taipei’s participation as an observer at the World Health Assembly (WHA). The joint statement came as Taiwan has not received an invitation to this year’s WHA, which started yesterday and runs until Tuesday next week. This year’s meeting of the decisionmaking body of the WHO in Geneva, Switzerland, would be the ninth consecutive year Taiwan has been excluded. The eight offices, which reaffirmed their support for Taiwan, are the British Office Taipei, the Australian Office Taipei, the
CAUSE AND EFFECT: China’s policies prompted the US to increase its presence in the Indo-Pacific, and Beijing should consider if this outcome is in its best interests, Lai said China has been escalating its military and political pressure on Taiwan for many years, but should reflect on this strategy and think about what is really in its best interest, President William Lai (賴清德) said. Lai made the remark in a YouTube interview with Mindi World News that was broadcast on Saturday, ahead of the first anniversary of his presidential inauguration tomorrow. The US has clearly stated that China is its biggest challenge and threat, with US President Donald Trump and US Secretary of Defense Pete Hegseth repeatedly saying that the US should increase its forces in the Indo-Pacific region
RSS