PeopleSoft board rejects Oracle bid

By Iain Scott for PeopleSoft

Johannesburg, 12 Jun 2003

PeopleSoft`s board has voted unanimously to recommend that its shareholders reject rival Oracle`s $5.1 billion or $16 per share offer to buy the group.

"The board concluded that the offer would undoubtedly face lengthy antitrust scrutiny, with a significant likelihood that approval would not be granted," the board says in a statement.

"The board believes that the delays and uncertainties created by Oracle`s offer, coupled with Oracle`s stated intention to discontinue PeopleSoft`s market-leading products, represent a substantial threat to stockholder value."

It says also that the offer "dramatically" undervalues PeopleSoft.

PeopleSoft is itself in the process of acquiring JD Edwards, and the group has reaffirmed its commitment to the $1.7 billion deal. On Wednesday it filed notification with the US Department of Justice and the Federal Trade Commission of its intention to go ahead with the acquisition.

"Oracle`s offer seeks to enrich Oracle at the expense of PeopleSoft`s stockholders, customers and employees," says PeopleSoft president and CEO Craig Conway.

"We believe that Oracle`s proposed acquisition of PeopleSoft would stifle competition and limit customer choice."

Meanwhile, Oracle has reported that its full-year net income has increased by 4% to $2.31 billion or $0.43 a share, compared with net income of $2.22 billion or $0.39 a share the previous year.

This was despite a 2% drop in revenue to $9.5 billion.

Fourth-quarter revenue increased by 2% to $2.83 billion while net income for the quarter increased 31% to $858 million.

"This has been a very strong quarter for us, even with the war in Iraq and the SARS [severe acute respiratory syndrome] right in the middle of it," says Oracle CFO Jeff Henley.

"In light of the continuing tight IT spending environment, we are particularly pleased that we executed well enough to deliver some top-line growth in our business while improving both profits and margins."

According to Reuters, Henley says that Oracle is to kick off a roadshow this week as part of its effort to sidestep management and convince PeopleSoft shareholders to back its takeover bid.

"We think that the shareholders will decide that a $16 all-cash offer from Oracle is a much safer way to go," Oracle chief executive Larry Ellison said in a conference call.

Reuters also reports that PeopleSoft`s shares have remained above the offer price, leading some analysts to question whether Oracle would sweeten its bid.