But Oracle's hostile bid may serve as a distraction from those plans. "PeopleSoft has a very difficult challenge. They have to run their business, they have to think about the integration plan, and they have to fend off Oracle's hostile bid. They have an even more difficult challenge than we do," Dutkowsky said. He noted, however, that he remains optimistic Conway will succeed in integrating the companies. Not only will PeopleSoft need to keep the customers of the combined company happy, but also the investors. Unhappy investors will likely be particularly sensitive to Oracle's buyout offer of $19.50 a share. "PeopleSoft and J.D. Edwards were able to get their transaction completed. But at the end of the day, if the stock isn't near $19.50 a share in six months, there will be some stockholders who aren't going to be happy about things," said Cameron Steele, an analyst with RBC Capital Markets. J.D. Edwards investors stand to make a quick gain on their investment, should Oracle succeed in its hostile takeover attempt of PeopleSoft and they tender their shares to the database company. If they tender their shares to Oracle by its 15 August deadline, they would receive $19.50 a share if the hostile merger goes through. "We're in the process of evaluating that at this time. It all comes down to how strongly we feel PeopleSoft can successfully execute on integrating the companies and whether the synergies they hope to accomplish are realistic," said one large institutional investor for J.D. Edwards. PeopleSoft's merger with J.D. Edwards also creates several new issues for Oracle's hostile bid. But Oracle still plans to move forward with its efforts. "We believe time is on our side. Oracle remains committed to acquiring PeopleSoft -- even with the addition of J.D. Edwards," said Jim Finn, an Oracle spokesman. Based on its current offer of $19.50 a share, Oracle would have to pay an additional $1bn to acquire PeopleSoft after its J.D. Edwards merger, according to Tad Piper, a senior analyst for Piper Jaffray. That figure is based on the additional 52.6 million shares that would result from the PeopleSoft and J.D. Edwards merger. But Piper noted Oracle has access to a combined $11.5bn in cash and credit, enough to easily pay for a newly merged PeopleSoft. "They are staying at $19.50. I don't see that changing until the antitrust debate (for Oracle's bid) is resolved," Piper said. The US Department of Justice and attorneys general from approximately 30 states are reviewing Oracle's buyout offer of PeopleSoft. Meanwhile, Oracle has remained quiet on any plans it may have for J.D. Edwards, if it acquires the combined company. But some analysts and sources familiar with the companies said a spinoff of all or part of J.D. Edwards' business may be on the list. "It's a lot less attractive to Oracle to buy J.D. Edwards, because a large percentage of the J.D. Edwards customer base is on IBM technology. The ability to up-sell in the J.D. Edwards customer base is less so than in the PeopleSoft customer base," Piper said. If its bid succeeds, Oracle may cut loose J.D. Edwards' AS/400 business from the rest of its operations and sell it to SSA Global Technologies and Baan, which are merging, said a source familiar with J.D. Edwards. "It would be a clean cut to spin off that business and sell it to SSA and Baan, which are in that business," the source said. "Do I think Oracle would sell it to their competitor? No. But I do think they will use it as a carrot to say they could if they have antitrust issues with the DOJ and attorneys general."
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