J.D Edwards' CEO Believes Feds Would Nix Oracle-PeopleSoft Merger

At a press conference hastily arranged over the weekend preceding J.D. Edwards' Focus user conference here, J.D. Edwards CEO Bob Dutkowsky said Oracle's proposed takeover of PeopleSoft "raises such serious anti-trust problems that it will face months of investigation by the U.S. Department of Justice and the Securities and Exchange Commission.

"There is a high likelihood that one or both agencies will end up blocking the action," Dutkowsky predicted.

"Oracle's hostile tender offer will eliminate at least one of Oracle's major competitors in several market spaces to the obvious detriment of customers," Dutkowsky said. "Oracle made it clear that 85 percent of PeopleSoft customers will be migrated to Oracle 11i, and that further development of PeopleSoft will cease."

Were the Oracle takeover of PeopleSoft to proceed, it would "reduce customer choice," Dutkowsky said. "That's exactly what our anti-trust laws are designed to prevent.

Following a question about published reports that Oracle would give PeopleSoft customers free upgrades to Oracle's business suite, Dutkowsky sounded a warning. "Free is not free," he said, pointing out that the cost of the software is relatively small compared with the cost of implementing and maintaining it.

In response to a question about PeopleSoft's and J.D. Edwards' defensive options against Oracle, J.D. Edwards CFO Rick Allen said that his company and PeopleSoft would continue to impress upon the market the pro-customer, pro-shareholder benefits of PeopleSoft buying J.D. Edwards.

"A definitive merger agreement is in place, and we have started integration planning between the two companies," Allen said.

"We can do more together than we could achieve at separate companies," Dutkowsky added. "We believe this merger is a perfect match of two extraordinary and highly complementary companies."

Oracle's tender offer, filed this morning, offers $16 per PeopleSoft share. By law PeopleSoft is bound to consider the offer.

"You have to wonder how serious [Oracle is]," Dutkowsky added, considering that PeopleSoft's share price Monday morning was $17.98 per share.