Oracle Secures $1.5B Credit Line

Preparing for a green light from regulatory bodies regarding its $7.5 billion takeover bid for applications rival PeopleSoft , Oracle has secured a $1.5 billion credit line to pad its finances.

A recent Oracle filing with the Securities and Exchange Commission (SEC) indicate that Credit Suisse First Boston (CSFB), ABN AMRO Bank N.V. and others have agreed to give Oracle a 364-day $1.5 billion credit line to “finance the acquisition and related fees and expenses and for working capital purposes.”

Oracle would likely use the cash to finance a purchase of Pleasanton, Calif.’s PeopleSoft, which has, through an acquisition of mid-market vendor J.D. Edwards and a customer assurance program operating as an unofficial poison pill, caused its price tag to balloon from $5.1 billion to $7.5 billion.

Redwood Shores, Calif.-based Oracle, which had previously arranged for a 364-day $5 billion credit with CSFB, has been at war with PeopleSoft since it announced its intent to purchase the enterprise software competitor June 6. That offer came four days after PeopleSoft agreed to acquire
J.D. Edwards.

The enterprise software arena has undergone a considerable amount of consolidation in 2003, but the applications space is dominated by German giant SAP. Oracle and PeopleSoft are essentially jostling for the No. 2 slot.

However, Oracle’s bid is on hold as it awaits word from the U.S. Department of Justice (DOJ) and the European Commission, which are both investigating information from both Oracle and PeopleSoft to determine if the deal would benefit customers or violate antitrust regulations.

A decision is expected in early 2004. A finding of antitrust concerns would effectively quash the deal, while a finding that the bid could be beneficial to customers could signal the end of PeopleSoft.

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