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PeopleSoft's Board Rejects Oracle's Latest Bid

PeopleSoft's board has voted unanimously to urge its stockholders to reject Oracle's improved takeover bid of $19.50 a share.

The response is the latest twist in an already-protracted, fierce power struggle for two rivals vying for the No. 2 pole position in the enterprise applications space. The fight began June 2 when PeopleSoft moved to merge with mid-market applications maker J.D. Edwards , and heated up five days later when Oracle launched its surprise bid to acquire PeopleSoft, in a bid originally set at $16 a share.

Since then, Oracle, PeopleSoft and J.D. Edwards have launched a series of manuevers to thwart each other's plans, including lawsuits and publicity campaigns.

Friday the Pleasanton, Calif. company's board backed up its previous statements that the deal would cause serious anti-trust issues with the U.S. Department of Justice and European Commission, and that the offer undervalues the company. The board rejected Oracle's first offer of $16 a share June 12. That offer totaled $5.1 billion. Oracle upped its bid to $6.3 billion Wednesday.

The board called the deal "highly conditional," and said it fears Oracle could withdraw it at will. The board also reiterated its concern that Redwood Shores, Calif.'s Oracle would discontinue PeopleSoft's products, causing great problems with customers. Oracle has stated that it would continue to support existing PeopleSoft platforms, and provide free add-on modules to help migrate customers to its eBusiness Suite.

"Oracle's offer undervalues the Company and is not in the best interest of PeopleSoft stockholders," said PeopleSoft President and Chief Executive Officer Craig Conway, whose company commenced its augmented offer for J.D. Edwards Thursday. "It is highly conditional, faces significant regulatory delays and uncertainty, and threatens serious damage to our business."

"Once again, PeopleSoft's board has put management's interests first, ignoring the mounting demands of its shareholders to redeem the poison pill and meet with Oracle," said Oracle spokesman Jim Finn in response to the board's latest move.