Oracle steps up the pressure

By Iain Scott, ITWeb group consulting editor

Johannesburg, 10 Jun 2003

Oracle, engaged in a $5.1 billion hostile takeover bid for PeopleSoft, has sent a sternly worded letter requesting a meeting with the PeopleSoft board.

Oracle announced late last week that it had tabled an offer of $16 a share for PeopleSoft, itself in the process of acquiring fellow enterprise application company JD Edwards.

PeopleSoft president and CEO Craig Conway condemned the offer as "atrociously bad behaviour" aimed at derailing the JD Edwards acquisition.

Oracle chairman and CEO Larry Ellison says in his letter to Conway that Oracle`s offer is a serious one and requires a full review.

"Your press release, quotes attributed to you in the press, and a notice we just received with respect to your intention to commence litigation against us raise the concern that you have taken a negative position with respect to the merits and motivations behind our offer before you and the PeopleSoft board have taken the time required to consider the offer.

"We have made a serious, fully financed, all-cash offer to your stockholders, and your fiduciary duties to those stockholders require a full and fair review done in good faith.

"This matter will ultimately be decided by the PeopleSoft stockholders based on the merits and not by frivolous litigation.

"I reaffirm our request that you redeem your poison pill to enable stockholders to act on our offer, and I expect that the board will not take any further action that would interfere with the rights of PeopleSoft stockholders to determine the outcome of this process."

Meanwhile, JD Edwards chairman, president and CEO Robert Dutkowsky says Oracle`s proposed takeover could fall foul of anti-trust laws.

"Such an acquisition would attract anti-trust investigation and have to be passed by both the US Justice Department and the European Commission," he says.

"It would eliminate a competitor, to the detriment of customers, who would have diminished options. This harm to customers is what anti-trust legislation is designed to stop, and accordingly the transaction could be blocked."