17 June--PeopleSoft and JDE take shareholders out of the equation. (CRM News Review).
In a bid to accelerate the completion of the deal, the new agreement introduces a cash sweetener and eliminates the need to issue new PeopleSoft shares, which removes the requirement for shareholders to vote on the transaction.
Oracle, which has made a hostile $5.1bn bid for PeopleSoft, condemned the move as an attempt at management "entrenchment", more about removing the shareholder vote than increase shareholder value.
Whereas the proposed merger was based initially purely on a stock-swap, the new agreement allows stockholders to exchange JD Edwards stock for PeopleSoft stock, cash, or a combination of both.
The companies believe the offer protects shareholder value because the cash portion of the transaction makes the value of JD Edwards more certain, while also reducing the dilution of PeopleSoft's earnings per share post-merger.
Based on the $16.92 closing price of PeopleSoft stock on June 13, the consideration for each outstanding share of JD Edwards common stock would be $14.33, for a total transaction value of approximately $1.75bn, $50m more than in the first offer.
JD Edwards president, chairman and CEO Bob Dutkowsky said in a statement: "The amended definitive agreement allows the companies to capture near-term financial synergies and deliver long-term stockholder value."
PeopleSoft president and CEO Craig Conway said: "The PeopleSoft and JD Edwards combination will provide exceptional value for our customers and stockholders."
Oracle CEO Larry Ellison said: "PeopleSoft is doing everything it can to prevent its shareholders from voting. If PeopleSoft's board is so convinced that the JD Edwards acquisition is a great deal, why won't they let their shareholders vote on it?"
The proposed consideration would be paid in the form of $863m in cash and 52.6 million newly issued PeopleSoft shares. Each JD Edwards stockholder will have the right to elect either cash or PeopleSoft stock, subject to probation. Both boards have approved the amendment.
Under the terms of the original deal, PeopleSoft offered 0.860 of PeopleSoft common shares for every outstanding JD Edwards common share. The cash portion of the new deal will be funded from PeopleSoft's existing cash and investments, which as of March 31 totaled approximately $2bn.
The transaction was originally worth $1.7bn, but this has now risen to $1.75bn. Another change is that JD Edwards stockholders would now own approximately 14.3% the outstanding capital stock of the combined company, rather then the 25% anticipated under the original terms.
Meanwhile, the protagonists also took to the newspapers in both US and Europe with full page ads in the financial press each extolling the benefits of their respective actions. Rival SAP AG is also using the press as a vehicle to enable it to take advantage of the situation, with a campaign targeted at wooing unsettled PeopleSoft and JD Edwards
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|Date:||Jun 24, 2003|
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