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Update: PeopleSoft to buy J.D. Edwards for $1.7 billion

PeopleSoft Inc. said today it planned to acquire long-time enterprise applications force J.D. Edwards. The stock transaction is valued at about $1.7 billion. The combined companies would approach $2.8 billion in annual revenue.

The purchase helps PeopleSoft, which started in the human resource software market during the client/server era and grew to cover the full enterprise, as it looks to further expand into the manufacturing and distribution industries. J.D. Edwards, a 25-year-old firm, brokered a foothold in AS/400 applications into a full-line enterprise presence in recent years.

Both companies competed against the likes of SAP, Siebel and Oracle, and this is not expected to change with the merger.

Under the agreement, J.D. Edwards will become a wholly owned subsidiary of PeopleSoft; J.D. Edwards stockholders will own approximately 25% of the outstanding capital stock of the combined company.

In a telephone press conference, PeopleSoft President and CEO Craig Conway was asked if this acquisition could face challenges similar to ones other mergers in the enterprise applications space have encountered.

“Acquisitions that have been troubled were troubled from the beginning,” responded Conway.

“Both these companies are cash flow positive. We start off from a fundamentally stronger framework, ” he said. Conway noted PeopleSoft’s established strength in human resources and enterprises, and J.D. Edwards’ strength in manufacturing and mid-markets as examples of the synergy the merger embodies.

As Germany’s SAP has held the lead, PeopleSoft has vied for second place in enterprise apps with Oracle for a number of years, said analyst Jim Shephard of AMR in an online report. The deal today places the combined company as the second largest enterprise application company in the world, second only to SAP, he said. Culturally, the two players mesh extremely well, Shephard indicated.

About the Author

Jack Vaughan is former Editor-at-Large at Application Development Trends magazine.

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