Oracle Softens on PeopleSoft Stance

Trying to ease up a bit in the hope that PeopleSoft’s board will finally agree to meet about its $6.3 billion buyout bid, software maker Oracle has waived its objection to PeopleSoft’s altered merger plans with J.D. Edwards.

Redwood Shores, Calif.’s Oracle had originally objected to PeopleSoft’s move to augment its own offer for Denver’s J.D. Edwards .

But Pleasanton, Calif.’s PeopleSoft, which competes with Oracle in the market for enterprise applications, went ahead and raised its bid from $1.7 billion to $1.75 billion June 16, and moved to speed the merger process.

Oracle, who itself sees a merger with PeopleSoft as a bonafide way to create an entity that can compete with German market leader SAP, said it is no longer objecting to this move, which it originally claimed was a obvious play by PeopleSoft to fend off Oracle’s tender offer.

“Although we have provided this waiver, we continue to view the amended merger agreement as an unlawful device to deprive PeopleSoft shareholders of their right to vote with respect to the J.D. Edwards merger,” said Oracle spokesperson, Jim Finn. “We hope that with this waiver, PeopleSoft will finally agree to meet with us, as their shareholders are demanding.”

PeopleSoft isn’t buying it. In a public statement, a spokesperson said:
“Removing the waiver means nothing when Oracle still has pending litigation
in Delaware that opposes the PeopleSoft/J.D. Edwards transaction.”

But one industry expert applauded Oracle’s concession.

“I think it’s great,” said Ken Marlin, managing partner at high-tech consulting firm Marlin & Associates. “Again, I think that shows that Ellison has shown that he is quite serious about this offer. PeopleSoft management is becoming fairly desperate to come up with a reason why they should reject Oracle. And Oracle’s board has a problem becuae they are charged with fiduciary responsibility to shareholders and not to management.”

The softening isn’t unprecedented. When it first bid for PeopleSoft June 6, the company said it would not longer make new PeopleSoft products, but agreed to continue to support existing platforms, such as PeopleSoft flagship versions 7 and 8. Now, Oracle is offering add-on modules and has publicly stated several times that it would not destroy the PeopleSoft line in the foreseeable future.

Meanwhile, against a backdrop of antitrust issues, and numerous
back-and-forth allegations of misdeeds, Oracle CEO Larry Ellison presided
over a keynote speech in London for his company’s AppsWorld show.

When asked if Oracle would consider sweetening its already sweetened deal
for PeopleSoft, which it raised from $16 per share to $19.50, Ellison said,
“Never say never,” and reaffirmed the company’s decision to buy PeopleSoft
to become a formidable player in the applications market.

In other related news, the Texas Attorney General’s office confirmed it
participated in a conference call with other states to discuss concerns
about Oracle’s bid for PeopleSoft.

While these states did not officially take action, Connecticut has already
done so. The state’s attorney general’s office filed
last week against Oracle, citing antitrust concerns and damage to
the state.

The state said a takeover would create an “enormous and expensive upheaval”
of the state’s conversion of its computer system, known as Core-CT, which is
slated to begin next month. The conversion, worth $100 million, is based on
software purchased from PeopleSoft under a five-year contract signed last

Oracle filed the amendment with the SEC Tuesday.

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