Oracle launches $5bn PeopleSoft bid

Business software giant Oracle today made an unsolicited bid to buy rival PeopleSoft in a deal worth $5.1bn (£3.1bn).

The announcement comes just days after PeopleSoft unveiled its surprise plans to buy mid-market enterprise resource planning vendor JD Edwards for $1.7bn (£1bn).

If the Oracle bid is successful it would take PeopleSoft out of the market completely.

Oracle intends to continue to support PeopleSoft's existing products, but would not produce further products, instead offering support for migration to Oracle applications.

"We can offer [customers] a much more comprehensive set of services," said Oracle chief executive Larry Ellison (pictured).

Buying PeopleSoft would reunite Ellison with former protégé Craig Conway, currently chief executive at PeopleSoft, who rose through the ranks at Oracle to become a sales vice president.

But it seems unlikely that Ellison's move is driven by dreams of a reunion. More likely, Oracle is protecting its position in the market.

The JD Edwards acquisition would have seen PeopleSoft overtake Oracle in the business software market.

Ellison said that Conway approached him a year ago expressing a desire to "combine" the two companies, forming a new entity based on PeopleSoft's applications and Oracle's database products.

But Ellison said that the pair "couldn't agree on structure".

Ellison has notified the PeopleSoft board of his offer to buy the firm in a deal worth $16 a share.

Should Oracle be successful, it has said that it will "review whether and on what terms it would support" the JD Edwards bid.

A PeopleSoft spokeswoman confirmed that the company was aware of the offer, and would be considering its response.