PeopleSoft Sues To Block Oracle Takeover BidPeopleSoft Sues To Block Oracle Takeover Bid

PeopleSoft Inc. has taken another step in its efforts to block Oracle's hostile takeover bid. The company said late Friday that it has sued Oracle to stop what it says is a sham tender offer aimed at destroying PeopleSoft's business. The complaint, filed in Alameda County Superior Court in California, alleges that Oracle has engaged in unfair business practices, trade libel, and tortious interference with PeopleSoft's customer relationships.

PeopleSoft's suit came one day after J.D. Edwards & Co. filed suit in Colorado state court claiming that Oracle has "tortiously interfered with its proposed merger with PeopleSoft." The suit seeks $1.7 billion in compensatory damages and an unspecified amount in punitive damages.

J.D. Edwards is also filing suit in California state court against Oracle, chairman and CEO Larry Ellison, and executive VP Chuck Phillips, alleging that they have engaged in wrongful conduct and unfair business practices. It seeks an injunction that enjoins Oracle from proceeding with its tender offer for PeopleSoft.

PeopleSoft's suit alleges that Oracle made the $5.1 billion cash offer to buy PeopleSoft in an effort to undercut PeopleSoft's business operations by creating uncertainty and doubt in the minds of its customers and prospective customers and to interfere with PeopleSoft's plan to merge with J.D. Edwards. What PeopleSoft calls misrepresentations by Oracle in various press releases, conference calls, and other communications are alleged to be a part of a scheme to freeze customer purchase decisions and to adversely affect PeopleSoft's end-of-quarter sales.

"Oracle seeks to disrupt PeopleSoft's efforts to complete new sales, thus effectively damaging PeopleSoft's business even if Oracle never buys a single share of PeopleSoft stock," PeopleSoft president and CEO Craig Conway said in a statement. The lawsuit seeks an injunction barring Oracle from proceeding with its tender offer as the only way that PeopleSoft's business can be protected.

The lawsuits were disclosed shortly after PeopleSoft's board unanimously rejected Oracle's bid and recommended stockholders do the same.

The board concluded that Oracle's offer would face lengthy antitrust scrutiny and that Oracle's plan to stop selling PeopleSoft products threatened stockholder value. At the same time, the board reaffirmed its support of PeopleSoft's plan to acquire J.D. Edwards.