KUHN CAPITAL Monday, March 19, 2018
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Software Deal of the Year

June 2

Peoplesoft announced today its intention to purchase JD Edwards for $1.7 billion in stock. The deal, a giant step toward software industry consolidation, would suture together a leading HR software vendor with a leading manufacturing integration software player in a bid to compete more effectively with giant German juggernaut SAP and Oracle.

With falling sales (down about 5% in 2002) but stable net profitability (about 8.5% of sales in the most recent quarter), Peoplesoft has been struggling with the global softening for IT services and products.

The combined entity will employ about 13,000 and generate sales of about $2.8 billion. By way of comparison, SAP's 2002 sales were $7.8 billion and Oracle's were $9.7 billion.

In the deal, Peoplesoft would pay an 18% premium over last week's JD Edwards stock price. Post-announcement, and as of this morning, Peoplesoft shares had fallen about 4%.

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