The number-two player on the software making hit parade, Oracle, has offered to buy rival PeopleSoft for $5.1 billion, bypassing management and going right to PeopleSoft shareholders, in a bid to boost its flagging business software standing, the company announced June 6.
" The deal signals the growing readiness by software executives to consolidate the struggling sector as corporate spending on technology has waned amid the slumping economy," said news wire Reuters
Oracle announced it would bring PeopleSoft shareholders a $16-per-share offer June 9, which Reuters said is a 6 percent premium over PeopleSoft's closing price at the end of June 5 NASDAQ trading. The stock closed at $15.11. Upon the Oracle announcement, PeopleSoft early trading June 6 jumped 22 percent while Oracle dipped 2.7 percent, to $13, Reuters said.
Oracle may be the world's largest database software maker for companies looking to store and organize business information, but they've struggled in establishing themselves likewise for software applications, especially tipped toward human resources, manufacturing, and other business needs. Buying PeopleSoft, Reuters said, would build their position to challenge SAP AG, now seen as the market leader.
"The only way that Oracle's going to be a player in applications is to buy someone," said AMR Research analyst Bruce Richardson to Reuters. "I think it's a smart move. It's just surprising because Oracle has never done anything like this on such a large scale."
It's also a move that's been considered in the past. Oracle kingpin Larry Ellison told reporters and analysts PeopleSoft leader Craig Conway approached him last year with an idea about combining the two companies' business application units, Reuters said, but the two couldn't agree on the structure of such a deal.
