Update: Oracle signs deal to buy PeopleSoft for $10.3B

IDG News Service - Oracle Corp. has signed a definitive agreement to acquire PeopleSoft Inc. for $26.50 per share, or about $10.3 billion, the companies said today, ending an acrimonious takeover battle that has lasted for more than 18 months.
The transaction has been approved by both companies' boards of directors and is expected to close by early January. The agreement followed discussions between the companies throughout the weekend, PeopleSoft said in a statement.
After careful consideration, PeopleSoft's board decided that Oracle's latest offer provides good value for PeopleSoft's stockholders, the company said. The agreement ends a long, emotional struggle, it said.
The customers Oracle gains from PeopleSoft will allow it to invest more in application development and support, Oracle said in a separate statement, repeating an argument the company has been making for the past 18 months as it fought to win support from PeopleSoft's shareholders, executives and customers.
The companies had been scheduled to meet later today in Delaware Chancery Court to give depositions over PeopleSoft's "poison pill" provision, aimed at blocking a hostile takeover attempt. The poison pill allows PeopleSoft to significantly inflate its number of outstanding shares in case of a takeover bid, making a buyout prohibitively expensive.
The companies now plan to put their litigation on hold and drop the claims entirely when the merger is complete, PeopleSoft said.
The agreement came after a representative from PeopleSoft approached Oracle over the weekend, according to Oracle CEO Larry Ellison, who discussed the deal during the company's quarterly earnings call today.
"We met throughout the weekend, and PeopleSoft gave us financial details that allowed us to analyze the transaction even better. We were able to assess the real value of the deal," he said.
The sum Oracle has agreed to pay is $2.50-per-share higher than the "final" offer it made for PeopleSoft at the start of November.
"This merger works because it increases our ability to sell into the applications marketplace; it doubles our installed base and increases our sales force," Ellison said.
Oracle plans to develop a suite of business applications that merges features from the products sold by Oracle, PeopleSoft and the former J.D. Edwards & Co., which PeopleSoft acquired last year for $1.8 billion, Ellison said. That product is still two to three years out. In the meantime, Oracle will enhance PeopleSoft 8 and J.D. Edwards 5, and also release upgrades to both those suites, he said.
"Customers should think of upgrading before they get the idea of moving to a merged product. It is some ways away,"