Big PeopleSoft Layoffs Likely

So. Its a done deal: After more than a year and a half of courtroom battles, boardroom machinations, and name calling, Oracle Corp. (Nasdaq: ORCL) will finally close its $10.3 billion acquisition of PeopleSoft Inc. (Nasdaq: PSFT) today (see Oracle to Close PeopleSoft Deal and The Price Is Right for PeopleSoft).

Last night Oracle confirmed that 97 percent of PeopleSoft shareholders had tendered their shares. The Redwood Shores, Calif.-based firm needed at least 90 percent of its rival’s shareholders to tender their stock to close the deal quickly. In what was already a seriously prolonged merger, Oracle stretched its offering period by another two days earlier this week (see Oracle Extends Offering Period).

But now the tough task of actually integrating the two companies begins. It has been suggested that Oracle may lay off as many as 6,000 of PeopleSoft’s employees, a massive chunk of the company’s overall workforce. According to PeopleSoft’s most recent annual report, the company has over 12,000 employees around the world. Oracle is aiming to notify PeopleSoft staff of their future employment status by January 14.

Gordon Haff, senior analyst at Illuminata Inc., warns that large-scale M&A deals are seldom easy. “It’s always difficult merging two companies, so, by definition, it’s going to be hard to pull off,” he says.

So, which parts of PeopleSoft are most likely to be cut? “In general, with M&A the most obvious areas of overlap are in operations -- finance and admin, that type of thing,” Haff adds.