Oracle Scores Majority of PeopleSoft SharesBy John Pallatto | Posted 2004-11-20 Email Print
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Updated: Oracle receives tender offers for more than 60 percent of the outstanding PeopleSoft shares and calls for talks to reach a formal buyout agreement.Oracle Corp. early Saturday morning sent a letter to the PeopleSoft Inc. board of directors disclosing that it received tender offers for more than 60 percent of PeopleSoft's outstanding shares by Friday's midnight deadline.
The letter called on PeopleSoft to remove the poison pill provisions blocking its hostile takeover and to schedule a meeting at its earliest convenience "to finalize a definitive merger agreement at $24.00 per share with the goal of announcing a deal prior to market open on Monday, November 22, 2004." To follow up with this news announcement, Oracle officials said they were sending a draft acquisition agreement to PeopleSoft's attorneys.
Oracle officials issued a press release early Saturday stating that the 60 percent majority gave it a "mandate" to acquire PeopleSoft for its $9.2 billion, all-cash offer.
Oracle is "prepared to complete and pay for the acquisition of all outstanding shares of PeopleSoft," Henley said, once PeopleSoft removes the poison pill, which would flood the market with millions of additional shares. PeopleSoft also has in place a customer protection plan that would pay customers two to five times their licensing charges if another company buys out PeopleSoft and then stops supporting or upgrading the products.
Regardless of Oracle's eventual takeover of its rival, eWEEK.com's Lisa Vaas says Oracle has a more important task: repairing its relations with channel partners and customers.
Oracle also announced that it was extending what it had consistently called its "best and final offer" until 6 p.m. EST on Dec. 31.
"We believe the combination of Oracle and PeopleSoft is compelling," the Oracle letter said. The "joint company will have a larger combined customer base, expanded brand reach, critical mass in more industries, and be able to provide substantially better global support," it stated.
The combined company, Oracle contends, "will be more competitive" against software industry archrivals SAP AG, Microsoft Corp. and a "wave of new outsourcing competitors."
Oracle contends the offer is "fair" and "represents a substantial premium to PeopleSoft's true historical trading multiples."
The news that more than 60 percent of shareholders want to sell out to PeopleSoft means that the company likely will be unable to legally resist the will of a majority of its shareholders. A lawyer representing PeopleSoft shareholders who favored the acquisition on Monday said his clients were considering filing suit because the PeopleSoft board of directors had rejected Oracle's latest offer.
Oracle has sued in Delaware Chancery Court seeking an order to nullify the poison pill and customer protection plan. The fact that a majority of shareholders support the buyout makes it more likely that the court will overturn the anti-buyout measures if PeopleSoft refuses to do so voluntarily and come to terms with Oracle.
Oracle served notice at the end of October that the $24 dollar per share bid was its "best and final" offer for the rival producer of ERP (enterprise resource planning) software.
Since Oracle announced its supposed final offer three weeks ago, both companies have engaged in a noisy public relations campaign to win over shareholders. Both companies released letters on Thursday seeking to try to influence shareholder opinion.
Oracle Chairman Jeff Henley released a letter on Thursday asking shareholders to consider that the $24 per share offer is higher than PeopleSoft's 52-week closing price. PeopleSoft Chairman Dave Duffield issued a letter defending stock sales he made in 2003, calling Oracle's criticism of those sales "distortions." Duffield threatened to sue if the criticisms persisted.
Oracle launched its hostile buyout bid on June 6, 2003, shortly after PeopleSoft announced that it was buying out another ERP software vendor, J.D. Edwards & Co. Since then, both companies have been locked in complex legal maneuvers seeking to prevail in the costly and wearing proxy fight.
It appears that Oracle has finally won after PeopleSoft lost out in a string of lawsuits and regulatory decisions in the United States and in Europe. The U.S. Justice Department blocked the Oracle buyout on the grounds that it violated antitrust law.
Oracle sued in U.S. District Court for Northern California to overturn the government action. After a two-month trial, the court ruled in September that the buyout would not violate U.S. antitrust law. The Justice Department declined to appeal the court's decision.
In late October, the European Commission also declared that an Oracle buyout would not violate antitrust law in the European Union.
Editor's Note: This story was updated to include quotes from Jeff Henley and to clarify some attributions.
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