Oracle, the software group, sharply increased the stakes yesterday in its hostile takeover bid for rival PeopleSoft, raising its offer by a third to $9.4bn (£5.2bn).
Oracle will hope that the increased offer is enough to put pressure on the PeopleSoft board to drop its fierce resistance to doing a deal. The takeover fight has on several occasions fallen into bitter exchanges between PeopleSoft chief executive Craig Conway and his former boss at Oracle, Larry Ellison.
The latest bid is the second time that Oracle has raised its offer since first making overtures to PeopleSoft in June last year. The original price offered was $16 a share, valuing the company at just $5.1bn.
PeopleSoft said the board would meet to review the bid and meanwhile urged shareholders not to take any action. The cash offer values PeopleSoft at $26 a share, topping the previous bid of $19.50.
"This is our final price," said Oracle chairman Jeff Henley. "We urge PeopleSoft's directors to seriously consider our offer and put the interests of their stockholders first."
Wall Street analysts said the price would probably be enough to win over shareholders. "At $26 the bulk of the investor base would support it," said Marty Shagrin, a technology analyst at Victory capital in Cleveland, Ohio. He said the renewed offer would intensify "the pressure on management to take a good hard look at this. Before it was easier to say no, but now they have to have a really compelling reason".
PeopleSoft had maintained that Oracle was not serious about doing a deal and had simply been seeking to block its own acquisition of another software firm, JD Edwards, and disrupt its day-to-day business. Mr Conway described the original offer as a "pathetic tactic".
Even if Oracle can convince PeopleSoft's board to recommend the bid, it will still need approval in Washington DC. The US department of justice, which has been investigating since the takeover was mooted, is expected to rule on whether a merger of the two companies would be anti-competitive before March 12.
The latest offer represents an 18.8% premium to the PeopleSoft closing price of $21.89 on Tuesday. It is an 8.2% premium on the 52-week high for the shares.
PeopleSoft recently completed the $1.7bn acquisition of JD Edwards and has in recent quarters appeared to strengthen its defences by producing better than expected results. But last week it slipped, providing a lukewarm forecast for the current period.
Oracle is the number two software company in the world and the acquisition of PeopleSoft would strengthen its position in the market. The target company makes software used by corporations to run everything from personnel departments to managing supplies.
Oracle is better known for database software, which accounts for around 80% of its revenues.
