eWEEK content and product recommendations are editorially independent. We may make money when you click on links to our partners. Learn More.
Despite its suitors announcement that shareholders had tendered more than 60 percent of outstanding shares of PeopleSoft Inc., the beleaguered companys board of directors on Saturday unanimously voted to reject Oracle Corp.s latest $24 per share buyout bid on the grounds that it is “inadequate.”
After meeting Saturday morning, the PeopleSoft board “unanimously reaffirmed its previous conclusion that Oracles latest offer is inadequate and that the company is worth substantially more than the $24 per share offered by Oracle.” The board is standing firm on its belief that the companys business plan creates superior value for stockholders.
Oracle announced early Saturday that it had received tender offers for a majority of PeopleSoft shares. It called on PeopleSofts board to meet with Oracle officials for talks aimed at reaching a definitive merger agreement—if possible, before the market opens on Monday.
“Based on numerous conversations we have had with our largest stockholders over the past 10 days, the board believes that a majority of our stockholders agree that the Oracle $24 offer is inadequate and does not reflect PeopleSofts real value,” said A. George Battle, chairman of the boards Transaction Committee, in a statement.
This majority includes stockholders who didnt tender their shares and those who did tender their shares “but told us that they believe PeopleSoft is worth more than $24 per share,” Battles statement said.
To support this assertion, the board noted that it expects “substantial” sequential sales and revenue growth for the 2004 fourth quarter. The company projects that total revenue will be in the range of $700 million to $715 million, with software license revenue in the range of $175 million to $185 million. The company contends that this momentum will continue into 2005.
The board decision ensures that the nearly 18-month buyout battle will continue in the courts as well as in the boardrooms of both companies. Oracle will likely return to Delaware Chancery Court to argue for the removal of a “poison pill” shareholder rights provision that would flood the market with millions of additional shares in an attempt to block the hostile buyout offer.
Next Page: PeopleSofts ready to keep fighting in court.
Shares Be Damned—PeopleSoft Fights On – Page 2
A company spokesman declined to comment on whether the board decision means PeopleSoft is about to invoke the poison pill bill. The company would have nothing more to say beyond what was stated in its press release, said spokesman Steve Swasey. Any other statements would be “speculative,” he said.
However, in the release, PeopleSoft noted that it was prepared to go to trial in January at Alameda Country Superior Court, in Oakland, Calif., seeking more than $1 billion in damages on claims that Oracle has engaged in unfair business practices through “a deliberate campaign to mislead PeopleSoft customers and disrupt its business.”
PeopleSoft also indicated that it planned to carry the proxy fight to its 2005 annual meeting in February. PeopleSoft has engaged Innisfree M&A Inc. to solicit proxies from shareholders.
Oracle launched its hostile buyout bid on June 6, 2003, shortly after PeopleSoft announced that it was buying out another enterprise resource planning software vendor, J.D. Edwards & Co. Since then, both companies have been locked in legal maneuvers as they attempt to prevail in the costly and wearing fight.
Oracle prevailed after PeopleSoft lost out in a string of lawsuits and regulatory decisions in the United States and in Europe. The U.S. Justice Department blocked the Oracle buyout on the grounds that it violated antitrust law. But a U.S. District Court decision in September overturned that finding. The Justice Department declined to appeal the court decision.
Check out eWEEK.coms for the latest news, reviews and analysis about productivity and business solutions.