PeopleSoft, J.D. Edwards Amend Merger Terms To Hasten Deal

Perhaps in hopes of sidestepping some of the complications that Oracle's hostile takeover bid for PeopleSoft set in motion, PeopleSoft and J.D. Edwards said Monday that they are changing the terms of their merger, announced June 2. Originally an all-stock deal, the merger will now move forward on a combination cash/stock basis, executives at the companies said.

The transaction will be paid in the form of $863 million in cash and 52.6 million newly issued PeopleSoft shares. J.D. Edwards stockholders will now have the option to elect to receive cash or PeopleSoft common stock.

Both PeopleSoft and J.D. Edwards Friday initiated legal action against Oracle, which on June 6 said it was moving to acquire Pleasanton-based PeopleSoft for $5.1 billion, or $16 per share.

The amended agreement lets J.D. Edwards and PeopleSoft "accelerate the completion of the transaction, bring forward the benefits of their combination and increase the accretion to earnings per share for PeopleSoft stockholders," according to a joint statement issued by the companies Monday.

It also "will minimize customer uncertainty arising from Oracle's recent tender offer and enable PeopleSoft and J.D. Edwards to speed their integration plans and the substantial benefits of the combination," the statement continued.

Based on PeopleSoft's closing share price on Friday of $16.92, each outstanding share of J.D. Edwards stock is now worth $14.33, valuing the deal at about $1.75 billion, roughly where it was when the deal was originally announced.

PeopleSoft also said it has recalculated the cost-savings to be gained by merging with J.D. Edwards. According to PeopleSoft, some $150 million to $200 million in slashed expenses, operational efficiencies and enhanced sales could be realized in 2004, as the companies reduce sales head count, nearby duplicate offices and other overlapping expenses.

Oracle wasted no time issuing a response to the PeopleSoft-J.D. Edwards move.

"Here they go again," read part of the Oracle statement. "The last and only chance for shareholders to choose has been taken away from them again.

"This move does not deter Oracle, and our offer remains before shareholders," the statement said.

The PeopleSoft-J.D. Edwards merger is slated to close next quarter.

BARBARA DARROW contributed to this story.