"The acquisition of PeopleSoft will immediately make Oracle an even more profitable and competitive company," said Oracle chairman and chief executive Larry Ellison.

The bid was a six percent premium to PeopleSoft's recent closing price, but the move sent PeopleSoft soaring 21 percent, up 3.20 to 18.31.

Oracle, which calls itself "the world's largest enterprise software company," specializes in software for the Internet and e-commerce, as opposed to rival Microsoft, which is stronger in consumer software.

Jeff Henley, Oracle executive vice president, said, "Given PeopleSoft's current prospects and plans, we believe our offer presents compelling value to PeopleSoft shareholders. In addition, we expect that the acquisition of PeopleSoft will increase Oracle's earnings per share from the first combined quarter."

Henley added, "We expect there to be substantial cost savings and minimal business integration risk."

The announcement came days after PeopleSoft's announced plans to acquire rival software maker J.D. Edwards for 1.7 billion dollars.

Oracle, in a statement, said that deal "is subject to several conditions and is not scheduled to be completed until this fall. Once Oracle's acquisition of PeopleSoft is complete, it will review whether, and on what terms, Oracle would support that transaction."

SPACE.WIRE