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PeopleSoft Shareholders File Suit - InternetNews.
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PeopleSoft Shareholders File Suit

In the latest in a long string of maneuvers, a group of shareholders filed a motion to prevent PeopleSoft from refunding customers in the event Oracle is successful in its hostile takeover plans.

Filed Thursday afternoon at the Court of Chancery, State of Delaware, the motion seeks to prevent PeopleSoft executives from putting a "poison pill" in any offer made by Oracle or other companies.

The suit seeks to bar PeopleSoft, which officials call their customer assurance program, from offering refunds of between two to five times the license fees in the event Oracle is able to acquire the company.

The shareholder roadblock comes a week after PeopleSoft filed a statement with the Securities & Exchange Commission (SEC) extending its license fee refund offer from one year to two.

Steve Swasey, a PeopleSoft spokesperson, said the lawsuit is completely without merit and that they would pursue it aggressively.

"We're going ahead with our customer assurance program because it's not a liability to PeopleSoft," he said. "All this program does is ensures our customers get a refund if a new buyer decides not to support our software.

If customers were really worried about a possible takeover they wouldn't be buying the software because of the license fee refund, he said. In the last three months, the company said it has sold software to more than 100 new and existing customers.

"When you buy a house, you don't buy it because it has great fire insurance, you buy it because it's a great house," Swasey said. "We're giving them great software."

Officials at Oracle said the customer assurance program is "management entrenchment at its worst," said Jim Finn, Oracle spokesperson in an e-mailed statement Friday.

"These modifications to PeopleSoft's so-called Customer Assurance Program are not about protecting customers," he wrote. "Instead, they reflect PeopleSoft's blatant disregard for shareholder value and choice, preventing shareholders from exercising their right to determine board membership.

"This is an obvious attempt to secure management's record pay packages, such as (PeopleSoft CEO) Craig Conway's which, according to Fortune Magazine, is valued at more than $112 million," he added.

The extension is just the latest salvo in a battle that's raged in the corporate rooms at PeopleSoft, after Oracle announced its intentions earlier this year to acquire the company for $7.5 billion.

Even if Oracle doesn't acquire the enterprise application company, PeopleSoft feels the damage has already been done. Last month, the company provided e-mail documentation to support its countersuit against Oracle, which PeopleSoft says proves the database company is out to damage them even if they don't take over the company.