In agreeing to a $26.50 per share offer, up $2.50 from Oracle's previous $24 bid, PeopleSoft's board brought to a conclusion a groundbreaking and contentious 18-month hostile takeover bid by Oracle. The deal, apparently worked out over the weekend, came as a Delaware court was scheduled to begin hearing arguments in Oracle's attempt to overturn an anti-takeover defense that had been erected by PeopleSoft. The deal followed the September ouster of PeopleSoft CEO Craig Conway, who had forcefully and publicly fought the hostile takeover bid.
In public statements on its Web site and in presentations to analysts, Oracle officials said that, in the short term, they plan to continue development on next-generation PeopleSoft application releases, including Version 9 of PeopleSoft's Enterprise applications and Version 6 of the World and EnterpriseOne products from J.D. Edwards, which were acquired by PeopleSoft in 2003.
Oracle said that, following release of those products, it will "offer future applications that combine the best features and functions of each company's products and are tightly integrated with the rest of the Oracle infrastructure offerings." Oracle said PeopleSoft customers will receive the combined product free, on a module-for-module exchange basis under their existing maintenance licenses. Oracle said PeopleSoft customers can migrate to the merged product when they chose. Oracle said it will continue to develop and provide support for PeopleSoft's existing products. That support will include "[detection of] corrections as they arise, regular product enhancements such as new reports or functionality and certain regulatory updates."
Oracle said it decided not to actively market the existing PeopleSoft products to new customers in order to "avoid confusion in the market." The company said the decision will also free resources to be put into merging the two product lines and providing ongoing support for the current PeopleSoft applications.
Oracle declined yesterday to provide information on what specific PeopleSoft modules will be included in the new, merged release other than to say they will be the "features and capabilities ... customers find most valuable."
While Oracle, in its press release announcing the acquisition, said it plans to develop a Version 6 release of the J.D. Edwards products, the company said it could give no firm commitments or roadmap for the ongoing support of those products. "Once we are able to meet with PeopleSoft and clarify the current situation, Oracle will be prepared to discuss publicly the ongoing support and maintenance plans for the former J.D. Edwards product line," an Oracle statement said.
PeopleSoft customers contacted yesterday were not surprised by the acquisition announcement. And, most seemed inclined to evaluate Oracle's actions before deciding whether to change upgrade or maintenance plans.
One customer, Ken Meidell, CIO at apparel maker Cascade Designs (Seattle), said he was hopeful PeopleSoft could remain independent until the U.S. Department of Justice lost its bid to block the deal on antitrust grounds. "Then the writing was pretty much on the wall," said Meidell.
Cascade Designs, he said, has spent the past few weeks evaluating its options. Currently, the company runs the PeopleSoft World applications on Microsoft .NET platforms mainly to hold down costs. While Cascade will consider migrating to a merged Oracle/PeopleSoft suite, Meidell said he's wary of that as a possibly more expensive option since it would be based on Oracle's database and infrastructure technologies, not Microsoft's.
Meidell said he's also considering using Microsoft's Biztalk server to surround the existing PeopleSoft World applications with features such as customer portals. And finally, Meidell said, Cascade could migrate from PeopleSoft World to a different application suite that is built on top of Microsoft's .NET platform. Meidell said he's considered SAP's Business One SMB product, Epicor and Microsoft's Axapta ERP products.
Another customer, who asked not to be identified, said his company will continue with plans to upgrade to release 8.8 of PeopleSoft's Enterprise product. "We've seen this coming for a while, so we're not changing anything," the customer said.