Oracle Stages a Proxy War

In its latest pitch to take over its rival, Oracle said it has initiated plans for a proxy fight this spring.

The Redwood Shores, Calif.-based software giant said it will nominate four men for PeopleSoft’s board of directors to take the control it needs to complete its hostile takeover bid of $24-per-share.

On November 10, the PeopleSoft Board of Directors rejected Oracle’s tender offer stating that they believed PeopleSoft is worth substantially more than Oracle’s $24 per share offer. Oracle’s only response has been to repeatedly state that its $24 offer is “best and final.”

Oracle tried to stage a coup of PeopleSoft’s board of directors last year but withdrew its slate when the U.S. Department of Justice filed its antitrust lawsuit. PeopleSoft’s Board of directors includes founder Dave Duffield, former Ask Jeeves CEO Skip Battle, Cyril Yansouni, Steven Goldby and Mike Maples.

“We have notified the PeopleSoft board of our intention to run an alternative slate of directors at the 2005 annual meeting,” Oracle Chairman Jeff Henley said in a statement. “We believe that the current board of PeopleSoft is not acting in the best interests of stockholders and that a large majority of those stockholders are in favor of a change.”

The four candidates were widely expected by analysts and include:

• Duke Bristow, an economist, the director of the Director Training and Certification Program at the UCLA Anderson School of Management and director of Arena Pharmaceuticals and Landec Corporation;
• Roger Noall, former Senior Executive Vice President and Chief Administrative Officer of KeyCorp, a bank holding company; director of Alleghany;
• Laurence E. Paul, Managing Principal of Laurel Crown Capital, a private equity investment firm; director of Ampco-Pittsburgh Corporation and Biovail Corporation;
• Artur Raviv, the Alan E. Peterson Distinguished Professor of Finance at the Kellogg School of Management, Northwestern University

PeopleSoft dismissed Oracle’s recommendations for a proxy war and said its conversations with shareholders favor PeopleSoft’s vision that Oracle’s $24 offer substantially undervalues PeopleSoft.

“We believe that Oracle has nominated this slate to allow Oracle to purchase PeopleSoft for an inadequate price that does not reflect the Company’s real value,” PeopleSoft said in a statement.

If a proxy war were to emerge, it could potentially extend the so-called “OracleSoft” debate well into 2005. Analyst suggest if that were to happen, it might parallel what happened in the HP-Compaq merger before the Institutional Shareholder Services (ISS) advised shareholders in favor of HP.

Oracle said it will be filing a proxy statement on Schedule 14A with the Securities and Exchange Commission (SEC) in time for the PeopleSoft meeting in March and has hired MacKenzie Partners to assist it in the solicitation of proxies from PeopleSoft stockholders.

ISS spokesperson Cheryl Gustitus told internetnews.com the firm could start looking at the deal and formulating its opinion by as early as January 20, 2005.

“Unless there is a special vote called by PeopleSoft’s board, the vote would take place during PeopleSoft’s annual shareholder’s meeting in late March,” Gustitus. “ISS would render its opinion 14 days prior to that (early March), which could include keeping the current board, advising for a different board or something in between.”

Gustitus said external events like the PeopleSoft vs. Oracle case scheduled to start January 10 in Calif. would only be taken into account if they were germane to the long-term value of the company.

Oracle’s statement on Wednesday came hours after a federal judge postponed his decision on the lawfulness of PeopleSoft’s “poison pill” and customer assurance rebate program. Both anti-takeover measures are designed to thwart Oracle’s hostile bid.