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Oracle's 'Final' PeopleSoft Offer Rejected

The battle for PeopleSoft now goes to the stockholders.

PeopleSoft's board of directors voted unanimously to recommend that its stockholders reject Oracle's final, $24 per share takeover offer because it does not reflect PeopleSoft's "real value."

The decision leaves the hostile takeover battle for PeopleSoft in the hands of stockholders as Oracle looks for a majority to accept the offer, which values the company at about $8.8 billion.

Dave Duffield, PeopleSoft's chairman and CEO, said in a statement: "The Board concluded that PeopleSoft is worth substantially more than Oracle's latest offer. We are a vibrant, strong company with a focused, motivated management team and employee base dedicated to executing on the Company's plan."

Oracle's cash tender offer is good until November 19. After that, Oracle said it would walk away from the fight to acquire its rival enterprise software maker.

"PeopleSoft's shareholders now face a very simple decision," said Jeff Henley, Oracle's chairman of the board, in a statement. "They can accept our all-cash $24 per share offer on November 19th or it will be withdrawn.

"We believe our offer represents a substantial premium over PeopleSoft's standalone value now or in the foreseeable future," he added. "We leave it to PeopleSoft's shareholders to decide whether PeopleSoft's current management can deliver better shareholder value now, or within any reasonable investment horizon."

In a statement, Oracle's CEO, Larry Ellison, said "Oracle has been at this for a year and a half and it is now time to bring this matter to a close. On November 19th, we will respect the will of the shareholders."

As part of its final offer, the Redwood Shores, Calif.-based Oracle also eliminated most prior conditions on the offer, noting that 50 percent or more of PeopleSoft's shares must be tendered and that PeopleSoft's board must remove two procedural anti-takeover blocks -- its poison pill provisions and Delaware law obstacles that protect companies from hostile takeovers.

However, if a majority of PeopleSoft's shares are tendered and the board has not removed the poison pill and law obstacles, Oracle said it will look to the Delaware Chancery Court to take action. A court is still mulling whether to make PeopleSoft remove its poison pill provisions.

Previously, PeopleSoft's Board has unanimously rejected all of Oracle's unsolicited offers suggesting that each of the last four bids (between $26.00 to $21.00 per share) "undervalued PeopleSoft."

PeopleSoft plans to continue its $1 billion lawsuit against Oracle, which is scheduled to go to trial on January 10, 2005. PeopleSoft's complaint alleges that Oracle has engaged in unfair business practices, including a deliberate campaign to mislead PeopleSoft's customers and disrupt its business. Both the European Commission's recent decision not to object to Oracle's plans to take over PeopleSoft, as well as a federal judge's decision to throw out the Department of Justice's lawsuit to block Oracle's takeover attempt, could be major blows to PeopleSoft's defense.

The EC has generally followed several rulings from the DoJ with similar findings, which said there was not enough evidence to suggest that competition would suffer if the two concerns merged.

The EC said the enterprise software market segment has other players with multinational activities beside Oracle, PeopleSoft and market leader SAP AG.

In September, U.S. District Court Judge Vaughn R. Walker ruled that the DoJ had failed to build a convincing case that the takeover would harm competition in the market for certain enterprise software applications. In a month-long trial, the DoJ repeatedly claimed the deal would create a monopoly in the enterprise resource planning (ERP) market, limiting choices to just SAP and Oracle.

Clint Boulton contributed to this report