A Big Night for Oracle and PeopleSoft

Should we stand and fight or take the money and run?

Such is the plight of PeopleSoft’s institutional
shareholders who have been asked to vote by midnight tonight in favor of or
against Oracle’s final
” of $24 per share (an estimated $9.2 billion) to merge the

If more than 50 percent of PeopleSoft’s roughly 375 million shares
are tendered in Oracle’s favor, analysts suggest PeopleSoft will need to work out with Oracle
how to make the deal attractive to PeopleSoft customers.

“In particular, there must be a coherent plan regarding how
PeopleSoft customers will be supported going forward,” Yankee Group
Enterprise Services analyst Mike Dominy said.

But the deadline isn’t really a deadline at all. It’s a line in the
sand, according to Joshua Greenbaum, a principal analyst with Enterprise
Applications Consulting.

“No matter how many shares are tendered, we’re still going to see
posturing, pressure, recriminations, and the like,” Greenbaum told
internetnews.com. “If Oracle doesn’t get the shares it wants by
the 19th, then my guess is they’ll wait until Q1 and buy it for a price
that could be substantially lower than the current offer.

“If they do get enough shares, the PeopleSoft board will either have to resign en masse
or sit tight until the shareholder meeting this spring when a new board
will be voted in. Either way, it’s still far from over.”

Already some of the major shareholders have chosen sides. California
Employees’ Retirement System (CalPERS) confirmed Friday that it is
tendering its 1.5 million shares in favor of Oracle’s plan.
Ohio’s state pension fund told Reuters it has also tendered its 527,790 shares in
favor of Oracle.

The two largest investors in PeopleSoft
have also chimed in.
Los Angeles-based Capital Guardian Trust told Oracle
executives that it was in favor of the deal. Private Capital out of
Naples, Florida filed papers with government regulators supporting
PeopleSoft’s position.

The non-binding straw poll is no guarantee the two companies will
merge. A Delaware Chancery court is still considering
whether PeopleSoft must remove its so-called “poison pill” and
customer rebate provisions, both anti-takeover measures. If the battle
for control of PeopleSoft stretches into next year, PeopleSoft still has
a $1 billion lawsuit against Oracle pending. The case is expected to
start in January.

Ultimately, if Oracle is successful in its bid, the software industry
will witness a period of turmoil over the next six to 12 months that it has
not seen before, according to Philip Fersht, integration and
infrastructure analyst with The Yankee Group.

“On the whole, this is great news for many vendors and systems
integrators who will find opportunities for their products and services
with regards to integration, new business application development etc.,”
Fersht told internetnews.com.

“Oracle will feel they have a great
chance to level the playing field with SAP in the business apps space,
but similarly, SAP will seize the chance to convert disaffected PeopleSoft
customers to their applications,” he continued. “However, who’s mentioned Microsoft?
Surely this is their chance to make their entry into the high-end
corporate business applications arena. Expect some reaction from
Seattle, as this is the missing link in their armory. Their ability to
develop ecosystems around their products has been their biggest
strength, and the time is rife for more high-end Microsoft business

Oracle said it would publish the results after
1:00 a.m. EST, Nov. 20.

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