Bills Are Adding Up in Software's M&A Feud

Oracle and PeopleSoft have spent between $30 million and $40 million fighting each other.
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The meter is still running on the ugly M&A fight between

Oracle

(ORCL) - Get Report

and

PeopleSoft

(PSFT)

. The two companies have already spent between $30 million and $40 million wooing shareholders, filing lawsuits and bashing each other in expensive, full-page ads.

Oracle's bill, according to its most recent 10-Q, has reached $19.6 million, including $5 million that relates to a commitment fee for the revolving credit facility the company will use to buy PeopleSoft if its $19.50-a-share offer is accepted.

PeopleSoft's numbers are not quite up to date, but as of its second quarter, the Pleasanton, Calif., company had spent between $10 million and $15 million fending off the hostile takeover. "It's a lot of money, but remember, this wasn't our idea," said PeopleSoft spokesman Steve Swasey.

Oracle's bid to buy PeopleSoft is currently under review by the Department of Justice, which is examining the transaction to see if it would reduce competition in the enterprise application software market by an unacceptable amount. PeopleSoft has already swallowed J.D. Edwards, and a merger of the three companies would create a giant that would be second only to

SAP

(SAP) - Get Report

.

The government is expected to rule by November.

Should the deal, now valued at about $7.5 billion, be approved, Oracle will then resume its aggressive solicitation of tender offers, and it has pledged to take the fight to PeopleSoft's shareholder meeting in the spring of 2004.

The CEOs of both companies, Larry Ellison of Oracle and his onetime employee, Craig Conway of PeopleSoft, have traded numerous insults in the three months since the battle began, and both say they are confident of victory. At PeopleSoft's annual user convention this week, Conway appeared onstage in a bulletproof vest accompanied by his dog, Abbey, a reference to a joking remark Ellison made in July.

At the time, Ellison told analysts that if he had a gun with only one bullet, he'd choose Conway over Conway's dog as a target. On Monday Conway said: "Abbey and I decided we weren't taking any chances," Conway said, showing a video of Ellison making the comment.