Oracle lowers PeopleSoft offer by $2bn

Oracle late on Friday said it has lowered its bid to acquire PeopleSoft to $21 a share, saying the reduced bid "reflects changes in market conditions."

Oracle's new bid is 21 per cent above Friday's $17.30 closing price for PeopleSoft shares, but $5 below the company's prior offer. The new bid lowers the total value of the deal from $9.6bn to $7.7bn.

Oracle Chairman and CFO Jeff Henley said in a statement: "Our revised offer reflects changes in market conditions and in PeopleSoft's market valuation." Henley added that the premium is still greater than the one offered when the PeopleSoft bid was first announced. "I believe that this deal will benefit stockholders of both companies," Henley said.

Oracle's bid has already been held up by various regulatory hurdles, including a challenge from US officials. Oracle President Charles Phillips said earlier Friday that the company hopes to resolve that issue by late summer.

The move comes after Oracle had twice raised the amount it was willing to offer for Oracle shares. In February, Oracle hiked its bid to $26 a share from $19.50. The company originally bid $16 a share for PeopleSoft last June, but improved on that two weeks later.

Last month, PeopleSoft reported earnings that narrowly missed analysts' expectations.

In a statement, PeopleSoft said its board of directors would consider the lowered bid at a regularly scheduled board meeting at the end of the month but noted that the board had rejected three earlier overtures.

"We note that Oracle has timed this announcement on the eve of our annual Leadership Conference, our most significant customer event for senior executives," the PeopleSoft statement said. "This is one more instance of what we firmly believe is Oracle's ongoing effort to damage our business."

PeopleSoft added that "given the significant antitrust obstacles in both the US and Europe, we do not believe Oracle's bid can be completed at any price."

Ina Fried writes for CNET News.com