Oracle captures PeopleSoft

SAN FRANCISCO -- Oracle Corp. finally scooped up bitter rival PeopleSoft Inc. after 18 months of legal and verbal strife, ending a nasty feud with a $10.3 billion deal that promises to shake up the business software industry.

Oracle sealed the agreement, disclosed yesterday, by upping its all-cash offer by 10 percent to $26.50 per share.

The final offer represents a 75 percent premium from PeopleSoft's market value before Oracle launched the takeover battle in June 2003.

"A lot of people compared us to Don Quixote tilting at windmills, but finally we now have PeopleSoft," Oracle chief executive Larry Ellison said yesterday. Bolstered by the addition of PeopleSoft's 12,750 customers and nearly $3 billion in annual revenue, Oracle is betting it can mount a more serious challenge to German software maker SAP's leadership in business applications software -- the computer coding that automates a wide range of administrative tasks.

Oracle is already the world's largest supplier of databases -- a position it hopes to strengthen by getting PeopleSoft's customers to spurn rival products from Microsoft Inc., IBM Corp., and Sybase Inc. in favor of Oracle's wares.

After completing the takeover next month, Oracle expects the PeopleSoft acquisition to boost its earnings by about $400 million, or 8 cents per share, in the fiscal year ending in May 2006.

Oracle eventually hopes to buy other tech companies, but won't consider other acquisitions until PeopleSoft is fully digested, Ellison said.

The fate of PeopleSoft's roughly 11,500 employees remains unclear. Oracle at one point drew up plans to fire more than 6,000 PeopleSoft workers, but the company recently has indicated that the purge might not be as dramatic as originally envisioned.