Business software maker PeopleSoft has announced that it intends to buy rival JD Edwards in a $1.7bn (£1bn) deal.
The acquisition would add expertise in the manufacturing sector currently lacking from PeopleSoft's portfolio, while bolstering JD Edwards' human resources and payroll capabilities.
The combined operation would have an annual turnover of $2.8bn and more than 11,000 customers.
PeopleSoft stated that it will continue full support for both companies' product lines once the deal is completed.
"There is no possibility of forcing customers to make choices they don't want," said Craig Conway, chief executive at PeopleSoft.
He added that JD Edwards' approach to rapid implementation, which requires less integration, would bolster its mid-market offerings. The firms plan to discuss future product integration later this month.
One early candidate for inclusion into the PeopleSoft product line would be JD Edwards' advance planning and supply chain software, according to Jim Shepherd, senior vice president for research at analyst firm AMR Research.
The acquisition would also give PeopleSoft the clout to compete on a more even basis with SAP and Oracle in Europe, where companies have historically been reluctant to see PeopleSoft as more than a human resources and payroll business, he added.
"Sheer size means that firms look more financially sound. This merger will also give PeopleSoft the manufacturing expertise it lacked," said Shepherd.
A spokesman for the UK JD Edwards user group commented: "The news has taken JD Edwards UK customers by surprise. It is too early to speculate on what this might mean for JDE and for its customers. The significance will become clearer as the days go by."
The deal is expected to close late autumn, subject to approval from regulatory bodies. Annual cost savings of around $80m are anticipated from the streamlining of operations.
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