Monday, December 13, 2004

PeopleSoft Softens Up

by DA Jacome

The fat lady has sung.

Oracle's 17-month-long push for PeopleSoft finally
ended Monday with a definitive agreement to buy out the rival software
maker for $10.3 billion. Oracle is expected to pay pay $26.50 a share
for its business software rival, about $2.50 a share more than its
previous "best and final" offer they pegged at $24. The merger will create the world's second-largest business software maker behind monster SAP.

Analysts remained dominantly bullish following the announcement. Prudential Equity Group analyst Brent Thill thinks "the acquisition materially improves Oracle's market position in both the applications and database technology markets" and estimates the deal will enable it for the longer term to boost earnings per share in the "low double digits as it capitalizes on new opportunities in the applications market and cross-selling of its database technology." Elsewhere, First Albany's Mark Murphy said the deal helps Oracle move "from a weak No. 3 player to a strong No. 2 player in the application software market." Oracle, he noted, "will be better able to compete with SAP, will create a more benign pricing environment, and will infuse PeopleSoft's customer base with Oracle's underlying database and application server technology." Even so, one analyst was less exuberant, claiming that integrating the two companies will be an arduous process because of all the bad blood that built up since Oracle made its initial bid. Ultimately, this guy may be right--mergers that halt at the roadblocks of cultural differences end on shaky ground. And we can ALL think of a couple prominent examples, right?

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