Merger Creates Business Software Giant

Clint Boulton

Updated · Jun 02, 2003

PeopleSoft
Monday agreed to buy J.D. Edwards &
Co.
for $1.7 billion in stock, a move that
shakes up the market for business applications software.


The deal makes PeopleSoft the second-largest business software provider to
Germany-based leader SAP as PeopleSoft will gain new access to mid-market
application customers to add to its large market customer base. Combined,
the companies will have about $2.8 billion in annual revenues, 13,000
employees and more than 11,000 customers in 150 countries.


PeopleSoft competes on different levels with SAP , Siebel and Microsoft to sell software for such segments as human resource management (HRM), customer relationship
management (CRM) or enterprise resource planning (ERP) to large companies,
meaning that the companies cater to small, medium and large classes of
businesses, based on size. As a provider of software for large-scale firms,
SAP effectively becomes PeopleSoft’s greatest competitor. Microsoft tends to
sell to the small- and mid-sized market, courtesy of its purchase of Great
Plains Solutions two years ago. Siebel typically sell to the
mid-sized market as well.


Buying Denver’s J.D. Edwards fills a gap in asset and manufacturing
applications for Pleasanton, Calif.’s PeopleSoft, while Denver’s J.D.
Edwards hopes to benefit from selling PeopleSoft’s popular human resources
management software, said PeopleSoft President and CEO Craig Conway.


“The employees of both companies share a cultural passion for serving the
customer,” said J.D. Edwards Chairman, President and CEO Bob Dutkowsky.
“Additionally, with PeopleSoft’s strength in the large enterprise space and
services industries, combined with J.D. Edwards’ position as an acknowledged
leader in the mid-market and manufacturing, we will be able to serve the
entire enterprise software market in a way that no other vendor can. The
integration of the two companies is a giant leap forward in fulfilling J.D.
Edwards’ goal to Make Customers Stronger.”


J.D. Edwards will become a wholly owned subsidiary of PeopleSoft, and J.D.
Edwards stockholders will own approximately 25 percent of the stock of the
combined outfit.


As for terms of the deal, PeopleSoft is offering stockholders 0.860
PeopleSoft common shares for each outstanding J.D. Edwards common share. The
value of the deal is based on the closing price of PeopleSoft stock on May
30, 2003 and J.D. Edwards’ shares outstanding.


The transaction will be accretive to PeopleSoft’s FY 2004 earnings on an
adjusted basis excluding amortization associated with intangibles, the
write-down of deferred revenue and other purchase accounting adjustments.
The transaction is expected to close in the late third or early fourth
calendar quarter.

Clint Boulton
Clint Boulton

Clint Boulton, a senior writer at CIO, covers IT leadership, digital transformation, and the CIO role. He was a content marketer for Dell APEX. Inspire IT leaders with tales about the advantages of multi-cloud infrastructures. Dunning-Kruger bias is something that keeps IT leaders sceptical, but curious nonetheless.