EU to Decide Oracle/PeopleSoft Next Week

European regulators are preparing to announce their position on Oracle’s hostile takeover bid for PeopleSoft, regulators said

European Union (EU) antitrust chief Mario Monti said a decision in case is on the
European Commission’s (EC) agenda for next Tuesday.
That is two weeks earlier than the Nov. 9 deadline previously set to wrap up the probe.

The EC had started and stopped its query several times while it
waited for Oracle to deliver key documents. European officials had
hinted that they wanted to wait until the U.S. courts had enough time to
sort through their own antitrust issues. A spokesperson for Oracle was
not available to comment on whether they had delivered all the requested
materials to the EC.

The announcement by the EC comes one day after Oracle extended its
tender offer of $21 per share (an estimated $7.7 billion) for all of the
outstanding stock of PeopleSoft . The proposed merger,
which would have expired at midnight, is now good until
Nov. 5.

PeopleSoft’s stock price dropped 27 cents to $20.16 in mid-day
trading even after the software maker beat pro forma estimates
by three cents with earnings of 17 cents a share,
and the company beat estimates on revenues ($699 million) and license
revenues ($161 million), too.

The Pleasanton, Calif.-based company’s board of directors has
maintained that it would consider a “reasonable and good faith tender
offer,” but it may be under increased pressure from the shareholders to
do so following the defeat of the U.S. Department of Justice’s antitrust case and Oracle’s trial in Delaware last week
to remove so-called “poison pills” from
PeopleSoft’s charter.

“Especially if the stock price falls well below $20. This could take
several more months to play out,” Paul Hamerman, analyst and vice
president of enterprise applications with Forrester Research, said.

Even if EU regulators do find one of the more memorable
hostile takeovers in recent history to be truly anti-competitive,
officials with the EC admitted to that their opinion might not be enough to stop
the deal from happening.

EC spokesman Anthony Gooch said theoretically the EC would allow
the merger to proceed if Oracle and PeopleSoft met certain conditions.
The terms could follow a similar path of restrictions and payouts as the
$7 billion proposed merger of electronics giants GE and Honeywell was faced with.
That merger proposal eventually failed in June 2001.

Even as the EC mulls its options, Oracle and PeopleSoft execs still
face a gamut of other obstacles including a shareholders vote and the
usual regulatory approval process before the merger is official. Some
analysts also point out that PeopleSoft could even opt to take the
company private and deny Oracle its quest.

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