06/10 - Oracle pushes ahead with PeopleSoft bid - East Valley Tribune: Business

06/10 - Oracle pushes ahead with PeopleSoft bid

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Posted: Tuesday, June 10, 2003 10:36 am | Updated: 1:17 pm, Thu Oct 6, 2011.

SAN FRANCISCO - Business software maker Oracle Corp. pressed ahead Monday with its $5.1 billion hostile bid for rival PeopleSoft Inc., brushing aside legal threats to kill the deal and investor pressure for a better offer.

Oracle expects PeopleSoft to sue it over the bid, according to a letter Oracle chairman Larry Ellison sent the company.

Redwood Shores-based Oracle released the letter, which restated Ellison's desire to meet with PeopleSoft President Craig Conway, who has already said he can't envision PeopleSoft accepting the $16-per-share offer.

In expressing his disdain, Conway - a former Oracle executive who worked for Ellison for eight years - has likened his old boss to Genghis Khan, a Mongolian emperor who reigned during the 12th and 13th centuries.

In his letter, Ellison told Conway the personal attacks and Monday's legal threat "raise the concern that you have taken a negative position ... before you and the PeopleSoft board have taken the time required to consider the offer."

A spokeswoman for PeopleSoft, which is based in Pleasanton, Calif., declined to comment on Ellison's letter or the planned lawsuit.

Investors continued to bet that PeopleSoft will be sold to Oracle or another bidder at a higher price.

PeopleSoft's shares gained 8 cents to close at $17.90 Monday on the Nasdaq Stock Market. Oracle's shares fell 23 cents to close at $12.86 on the Nasdaq.

Oracle believes its $16-per-share offer will look more attractive as investors have more time to digest the deals on the table, said Charles Phillips, a former software analyst recently hired as an Oracle executive vice president.

"We are very happy about the price we have offered," Phillips said. "As time goes on, we think investors will think about it and say, `Maybe the better route for PeopleSoft is to be sold to Oracle.'"

Oracle's tender offer to PeopleSoft shareholders expires July 7, although that deadline can be extended, according to documents filed Monday with the Securities and Exchange Commission.

Meanwhile, PeopleSoft's preferred mate, J.D. Edwards & Co., expressed its displeasure with Oracle's hostile bid - made four days after PeopleSoft agreed to buy J.D. Edwards in a stock swap valued at $1.8 billion Monday.

With its own merger plans in jeopardy, Denver-based J.D. Edwards attacked Oracle's proposed takeover as a violation of federal antitrust laws.

"Oracle's elimination of a competitor, its products, and their ongoing development would reduce customer choice and product support, and would leave many customers with greatly diminished options," J.D. Edwards CEO Bob Dutkowsky said.

Oracle is confident a PeopleSoft takeover would be approved by government regulators because the combined company would remain a distant second to German-based SAP in so-called "enterprise applications" software.

Enterprise applications refers to software that helps businesses run personnel departments and other behind-the-scenes operations.

Despite SAP's leadership in the market, regulators are likely to take a hard look at Oracle's takeover plans because the deal would phase out PeopleSoft's product line, said New York attorney Charles Biggio, an antitrust expert.

"This kind of hostile deal tends to raise red flags with antitrust enforcers," said Biggio, a former deputy assistant attorney general in the Justice Department's antitrust division.

As a major business software maker, J.D. Edwards "could become an antitrust spoiler if it helps the government understand the areas where the (Oracle) deal could hurt the market," Biggio said.

Oracle already is the world's second largest software maker behind Microsoft, but most of its sales come from database software - a separate category from enterprise applications.

Monday's SEC filings provided more details about past discussions of a possible alliance between Oracle and PeopleSoft.

The flirtation was serious enough that the two companies entered into a nondisclosure agreement in early June 2002. Ellison and Conway ended the discussions two days later, Monday's documents said.

At the time of those talks, PeopleSoft was in better shape, with its stock trading above $21 per share while Oracle's stock had fallen below $9 per share.

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