Peoplesoft, a leading provider of application software, will exchange 0.86 share of its stock for each share of J.D. Edwards. Based on Friday's closing prices, that represents a premium of about 19 percent for J.D. Edwards shareholders.

The statement said the deal would create the world's second-largest provider of enterprise applications software, which links its customers' back-office applications such as accounting and supply chain management and databases.

The purchase, which still needs the approval of regulators and the companies' shareholders, is expected to close in the late third or early fourth quarter and add to PeopleSoft's earnings per share in fiscal year 2004, excluding special items associated with the deal.