Oracle’s New Bid May Sway Shareholders

Oracle Corp.’s sweetened $6.3-billion cash bid for rival PeopleSoft Inc. may be enough to sway some shareholders to break ranks with management and accept the offer, analysts said Thursday.

The bid of $19.50 a share is 22% more than Oracle’s June 6 offer for Pleasanton, Calif.-based PeopleSoft. Investors scoffed at the first offer for being just 5.9% above the previous day’s share price. They’re taking the new bid more seriously.

“I wouldn’t be surprised if a lot of people tendered” at $19.50 a share, said Gus Zinn, an analyst with Waddell & Reed Financial Inc., which manages $28 billion, including 2.3 million Oracle shares and 2.2 million PeopleSoft shares.

He declined to say what Waddell & Reed would do with its PeopleSoft shares.

Redwood City, Calif.-based Oracle is in a race to buy PeopleSoft before PeopleSoft buys smaller rival J.D. Edwards & Co. for $1.75 billion. Oracle and PeopleSoft are jockeying for the No. 2 spot behind SAP in the $13.8-billion market for software used to manage business tasks such as accounting and payroll.

Oracle’s first bid for PeopleSoft was $16 a share, totaling $5.1 billion. PeopleSoft’s board rejected that offer, arguing that it was too low and would fail to win antitrust approval.

PeopleSoft on Thursday began its exchange offer for Denver-based J.D. Edwards, in which investors may choose $14.33 a share in cash or a mix of $7.05 in cash and 0.43 share of PeopleSoft. PeopleSoft can’t complete its acquisition of J.D. Edwards until it wins U.S. antitrust approval.

PeopleSoft shares fell 32 cents to $17.61 on Nasdaq. The shares are trading below Oracle’s $19.50 offer because of concern that PeopleSoft’s anti-takeover measures will block the transaction, investors said.

Oracle shares fell 8 cents to $13.34 and J.D. Edwards shares lost 7 cents to $14.03, also on Nasdaq.