Teaser from the Oracle

6 June 2003

The unsolicited cash deal might seem to suggest the bull market is back. But the deal rationale suggests otherwise. The 6% premium looks too low.

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Oracle, the US database and applications software giant, on Friday launched an unsolicited $5bn cash bid for Peoplesoft, a rival in the applications business.

Earlier this week, Peoplesoft unveiled a bid for a smaller rival, JD Edwards.

Oracle's offer is not subject to due diligence or financing. Credit Suisse First Boston, advising it on the transaction, has offered a bridge loan for the deal. However, the offer is subject to Peoplesoft cancelling or amending its poisonpill antitakeover defences.

The $16 a share offer is a 6% premium to Peoplesoft's closing price on Thursday. Peoplesoft shares rose 24% on the day to $18.62. Oracle's fell by 1.65% to $13.14.

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