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PeopleSoft to Buy J.D.
Edwards in $1.7 Billion Stock Deal
The news, announced Monday, comes as business-software companies face sluggish demand amid an ongoing downturn in technology spending.
The proposed acquisition will allow PeopleSoft, Pleasanton, Calif., to expand its presence in more than 20 industries, such as manufacturing, distribution and asset-intensive industries.
The maker of software for human resources and financial applications said its focus on the large enterprise space and services industries will fit well with J.D. Edwards' strength in the mid-market and manufacturing sectors.
Under the agreement, shareholders of Denver-based J.D. Edwards will receive 0.86 a PeopleSoft share for each J.D. Edwards common share. J.D. Edwards will become a wholly owned subsidiary of PeopleSoft and shareholders of the company will own about 25% of the combined company.
Based on PeopleSoft's closing price of $16.39 Friday, the deal is valued at about $14.10 a share, representing a premium of 19% to J.D. Edwards Friday closing of $11.81. Both stocks trade on the Nasdaq National Market.
The proposed acquisition, which has been approved by the boards of both companies, is expected to be tax-free to shareholders and close late in the third quarter or early fourth quarter. Directors and executives owning shares of their respective companies also have agreed to vote in favor of the deal, which still requires regulatory and shareholders approvals.
The combined company will have annual revenue of about $2.8 billion and about 13,000 employees.
PeopleSoft said it expects the deal will add to its 2004 earnings before amortization for acquired intangibles, deferred revenue write-downs and other adjustments for purchase accounting. Citigroup Global Markets served as adviser to PeopleSoft on the deal, while Morgan Stanley advised J.D. Edwards.