PeopleSoft to buy J.D. Edwards. The number of Tier I ERP vendors is shrinking by one, with PeopleSoft announcing this morning that it is buying J.D. Edwards. This is one of the biggest and most significant deals in the enterprise systems space in a long time. The combined company will have annual revenue of about $2.8 billion and about 13,000 employees. Both vendors cut a very broad applications footprint. Both are very strong in financial applications, while PeopleSoft has an edge in HR and CRM, and JDE has a stronger presence in manufacturing and distribution. Nevertheless, these two vendors go head to head in many deals. The press release indicates that JDE will operate as a wholly owned subsidiary of PeopleSoft, which means that existing clients will probably not see much change immediately. But it will be very interesting to see what happens when a prospect wants to look at both JDE and PeopleSoft.

Why is PeopleSoft doing this? There is already some speculation that PeopleSoft needs a stronger mid-market strategy to compete against Microsoft (with its Great Plains acquisition) and that of all the major enterprise system vendors, JDE has the strongest mid-market presence. CNET already has some analyst reaction.

The deal is expected to close by early fourth quarter 2003.