PeopleSoft, Inc. and J.D. Edwards & Company announced that they have amended their definitive agreement under which PeopleSoft will acquire J.D. Edwards. The amended agreement is designed to allow the two companies to accelerate the completion of the transaction, bring forward the benefits of their combination and increase the accretion to earnings per share for PeopleSoft stockholders.

Based upon the closing price of PeopleSoft common stock on June 13, 2003 of $16.92 per share, the consideration for each outstanding share of J.D. Edwards common stock would be $14.33, for a total transaction value of approximately $1.75 billion. The consideration will be paid in the form of $863 million in cash and 52.6 million newly issued PeopleSoft shares, based on J.D. Edwards 122.4 million shares outstanding. Each J.D. Edwards stockholder will have the right to elect either cash or PeopleSoft common stock, subject to proration. The transaction is expected to be significantly accretive to PeopleSoft's 2004 earnings per share on an adjusted basis, excluding amortization associated with acquired intangibles, the write-down of deferred revenue and other purchase accounting adjustments. The transaction is expected to close in the third calendar quarter of 2003.

The amended agreement:

  • Reaffirms PeopleSoft's and J.D. Edwards' Commitment to Combine. The combination of J.D. Edwards and PeopleSoft is a clear win for stockholders, customers and employees. The Boards of both companies unanimously approved the amendment and reaffirmed their support for the transaction.
  • Accelerates Closing and Minimizes Customer Uncertainty. The companies believe that the amended terms of the transaction will minimize customer uncertainty arising from Oracle's recent tender offer and enable PeopleSoft and J.D. Edwards to speed their integration plans and the substantial benefits of the combination.
  • Protects and Enhances Stockholder Value. The cash portion of the consideration increases the certainty of the value of the transaction to J.D. Edwards stockholders and, at the same time, increases the accretion to PeopleSoft's earnings per share for the benefit of all stockholders.

PeopleSoft is updating its previous synergy estimates based on information developed at the time it originally announced the merger. As a result, opportunities to improve operating efficiencies, reduce expenses and enhance sales are expected to provide annual synergies in the range of $150 million to $200 million, which would be fully realized in 2004. Cost savings are expected to result from efficiencies in the company's consulting and sales organizations and from eliminating redundant functions, headcount, and facilities. PeopleSoft also expects additional revenue opportunities from cross-selling and up-selling to the combined installed base.
J.D. Edwards stockholders will elect to receive cash or stock for their J.D. Edwards shares, subject to proration. Depending upon the outcome of the stockholder elections and the resulting proration, if any, J.D. Edwards stockholders will receive cash, a fraction of a PeopleSoft common share, or a combination of cash and a fraction of a PeopleSoft common share, in each case having a value of $7.05 plus the value of 0.43 of a PeopleSoft common share for each share of J.D. Edwards common stock they own. The cash and PeopleSoft shares payable to J.D. Edwards stockholders in the offer will be allocated in accordance with the election and proration procedures such that the total amount of cash that PeopleSoft will pay in the offer and merger is fixed at $7.05 multiplied by the number of shares of J.D. Edwards purchased in the offer, and the total number of PeopleSoft shares that PeopleSoft will deliver to J.D. Edwards stockholders is fixed at 0.43 multiplied by the number of shares of J.D. Edwards purchased in the offer. The stock portion of the consideration is expected to be tax-free to J.D. Edwards stockholders.

PeopleSoft expects to commence the Exchange Offer shortly. Upon completion of the Exchange Offer, any remaining J.D. Edwards shares will be acquired in a second-step merger. After the acquisition is completed, J.D. Edwards stockholders will own 14.3 percent of the combined company.

PeopleSoft anticipates that it will finance the cash portion of the transaction with its existing cash and investments, which as of March 31, 2003, totaled approximately $2 billion. The transaction is subject to regulatory review and other customary closing conditions. Citigroup Global Markets and Goldman, Sachs & Co. are financial advisors, and Gibson, Dunn & Crutcher LLP is the legal advisor, to PeopleSoft. Morgan Stanley is the financial advisor, and Wilson Sonsini Goodrich & Rosati is the legal advisor, to J.D. Edwards.

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