PeopleSoft Says No To OraclePeopleSoft Says No To Oracle

PeopleSoft Inc.'s board of directors voted unanimously on Friday to recommend that stockholders reject Oracle's upgraded bid for a hostile takeover.

Oracle's revised bid, announced on Wednesday, increased the offer amount by about 22% to $6.3 billion, or $19.50 for each PeopleSoft share. The original proposal offered $16 per share. The board stood by its previous statement that the offer isn't in the best interest of shareholders, and that the two companies would undoubtedly face painful regulatory delays.

The board also said the revised offer was risky, and that it undervalues PeopleSoft based on its financial performance and growth potential, particularly in light of the pending J.D. Edwards acquisition. Oracle's offer "undervalues the company and is not in the best interest of stockholders," PeopleSoft CEO Craig Conway said. It also faces significant regulatory delays and uncertainty, and threatens serious damage to the company's business, he added.

The rejection comes one day after PeopleSoft sweetened its acquisition proposal to J.D. Edwards shareholders. The ERP vendor presented shareholders with a choice between cash and PeopleSoft stock. Under terms of the exchange, PeopleSoft is offering common stock with a value equal to $7.05 in cash, plus the value of 0.43 of a PeopleSoft common share for each share of J.D. Edwards common stock. The exchange offer, open until July 17, is valued at $1.75 billion, or $14.33 per share.

Meanwhile, Oracle is fighting a lawsuit filed Wednesday by the state of Connecticut, which says the proposed takeover of PeopleSoft would harm the state's economy and cost it millions of dollars. It's also battling backlash from PeopleSoft customers who are uncomfortable with the idea of being forced to move to Oracle.

The big winner could be SAP, which leads the market for enterprise applications, followed by Oracle, and then PeopleSoft.

PeopleSoft customer Joseph Vossen, VP of information services at Smead Manufacturing Co., a maker of office products, says a SAP salesman called him and left a message on his voice mail Thursday. Says Vossen, "They're calling all the PeopleSoft customers and offering a really good deal to bail out of PeopleSoft and go to SAP, so you don't have to go to Oracle."