Oracle to PeopleSoft: ‘Best and Final Offer’
UPDATED: Oracle has upped its offer for PeopleSoft
to $24 per share, in what it called its final bid for the elusive
enterprise applications company it has been trying to acquire since June
2003.
The revised offer is $3 per share higher than its previous offers and
brings the total bid to about $8.8 billion. Oracle was buoyed by last
week’s vote by the European Commission to clear its offer.
The Redwood Shores, Calif.-based Oracle also agreed to
eliminate most conditions on the offer, noting that 50 percent or more
of PeopleSoft’s shares must be tendered and that PeopleSoft’s board must
remove two procedural anti-takeover blocks — its poison pill provisions and
Delaware law obstacles that protect companies from hostile takeovers.
However, if a majority of PeopleSoft’s shares are tendered and the board has not removed the poison pill and law obstacles, Oracle said it will look to the Delaware Chancery Court to take action. A court is still mulling whether to make PeopleSoft remove its poison pill provisions.
Oracle Board Chairman Jeffrey O. Henley discussed Oracle’s
positioning on a conference call:
“The price is substantially higher than where PeopleSoft’s shares
would trade were it not for our offer,” Henley said, noting that it was
the Delaware Chancery Court judge who urged Oracle to make “our best and
final offer. We think it is incumbent on the PeopleSoft Board to show at
least equal deference to the will of its own stockholders.”
The amended offer will expire at midnight Eastern Standard Time on
Friday, Nov. 19. Oracle will withdraw its offer if a majority of
PeopleSoft’s shares have not been tendered into the offer.
In a statement, PeopleSoft advised its stockholders to take no action
at this time in response to Oracle’s revised bid.
“PeopleSoft’s Board of Directors, consistent with its fiduciary
duties, will meet to review the amended tender offer and make its
recommendation to PeopleSoft stockholders in due course,” the company
said.
Previously, PeopleSoft’s Board has unanimously rejected all of
Oracle’s unsolicited offers suggesting that each of the last four bids
(between $26.00 to $21.00 per share) “undervalued PeopleSoft.”
PeopleSoft also said it will continue with its $1 billion lawsuit
against Oracle, which is scheduled to go to trial before a jury on
January 10, 2005. PeopleSoft’s complaint alleges that Oracle has engaged
in unfair business practices, including a deliberate campaign to mislead
PeopleSoft’s customers and disrupt its business.
Both the EC’s recent decision and a federal judge’s decision to throw
out the Department of Justice’s lawsuit against Oracle could be major blows to PeopleSoft’s defense.
Interestingly, the EC, which has generally followed several rulings
from the DoJ with similar findings, said there was not enough evidence
to suggest that competition would suffer if the two concerns merged. The
EC said the enterprise software market segment has other players with
multinational activities beside Oracle, PeopleSoft and market leader SAP
AG.
In September, U.S. District Court Judge Vaughn R. Walker ruled that
the DoJ had failed to build a convincing case that the takeover would
harm competition in the market for certain enterprise software
applications. In a month-long trial, the DoJ repeatedly claimed the deal
would create a monopoly in the enterprise resource planning (ERP)
market, limiting choices to just SAP and Oracle.
PeopleSoft’s board, which fired ex-CEO Craig Conway on October 1, continues to refuse to meet
with Oracle to negotiate a deal; but shareholders may force the board’s
hand.
Ultimately, this is what Oracle expects to happen and the company has
specific plans for the Pleasanton, Calif., outfit going forward. Henley
and CEO Larry Ellison sent a letter to the PeopleSoft board Sunday
promising to develop and introduce a next generation of PeopleSoft
products and will maintain an engineering unit at the Pleasanton campus.
Clint Boulton, a senior writer at CIO, covers IT leadership, digital transformation, and the CIO role. He was a content marketer for Dell APEX. Inspire IT leaders with tales about the advantages of multi-cloud infrastructures. Dunning-Kruger bias is something that keeps IT leaders sceptical, but curious nonetheless.