PeopleSoft, J.D. Edwards Comment on Oracle Bid

Following Friday's news that Oracle has set in motion a potential takeover of PeopleSoft only days after it announced it would acquire J.D. Edwards, PeopleSoft CEO Craig Conway made some harsh statements against Oracle. Conway called the takeover bid, "atrociously bad behavior from a company with a history of atrociously bad behavior," and added in a company statement that the move is "obviously a transparent attempt to disrupt the acquisition of J.D. Edwards by PeopleSoft." PeopleSoft called to attention its market share gains against Oracle in the company statement and noted that the intended J.D. Edwards acquisition is a positive move for all involved. "If anyone needed any further validation of the strength of the J.D. Edwards acquisition, we heard it today from Oracle," Conway said in the statement. In addition to PeopleSoft's comments on Oracle's bid, J.D. Edwards held a conference call this morning during the company's user conference being held in Denver, to comment on the developments. "An Oracle acquisition of PeopleSoft would be an obvious detriment to customers," says Bob Dutkowsky, president, chairman, and CEO of J.D. Edwards. He adds that Oracle's decision to eliminate the PeopleSoft product line would result in "greatly diminished options for customers who have invested in PeopleSoft." Oracle said in a statement that all PeopleSoft customers would have to migrate to Oracle 11i, since development and support of PeopleSoft products would cease. Dutkowsky also says that there is a high likelihood that the deal would be blocked by regulatory agencies on antitrust grounds. "Oracle has called this a consolidating merger, while the PeopleSoft/J.D. Edwards merger is one where two companies are joining complimentary strengths," Dutkowsky says, since J.D. Edwards adds a mid-market customer base for a primarily enterprise-level PeopleSoft. Analysts have been quick to point out the downsides of the takeover. AMR Research stated the following in a company release: "Our initial reaction is that this is a typically provocative move by Oracle and that the offer price is probably too low. On the other hand, Oracle probably has nothing to lose by making a low bid. If the transaction goes through, it will have gotten a very good product and customer base at a bargain price. But Oracle will have a lot of work to do to persuade PeopleSoft users to stick around after the dust settles, particularly after showing them so much disdain during the bid. If it doesn't work, Oracle will have disrupted PeopleSoft plans to buy J.D. Edwards and stolen much of the media and investor attention." Sheryl Kingstone, CRM program manager at the Yankee Group, says that the question that no one is asking is whether it is a good move for Oracle shareholders. "There is a lot of buzz about PeopleSoft shareholders and how they can gain, however," she says. "If this goes through," Kingstone adds, "Oracle better migrate those PeopleSoft customers or it has given up a lot for a little," which she says will lessen significantly the long-term value of the deal.
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