J.D. Edwards CEO: Oracle's bid will raise antitrust flags

J.D. Edwards CEO: Oracle's bid will raise antitrust flags

Oracle 's proposed hostile takeover of PeopleSoft would be disastrous for both current PeopleSoft customers and for the competitive dynamics of the enterprise software market, according to J.D. Edwards & Co. chairman and chief executive officer (CEO), Bob Dutkowsky.

He was speaking at a press conference opening Quest Global 2003, J.D. Edwards' annual customer conference .

J.D. Edwards agreed last week to be taken over by PeopleSoft. Oracle's surprise bid for PeopleSoft places in jeopardy that agreement, which must be approved by shareholders of both J.D. Edwards and PeopleSoft.

Oracle has filed with the US Securities and Exchange Commission papers detailing its bid, which offers PeopleSoft stockholders $US16 per share, for a total takeover price of $US5.1 billion in cash. The tender offer commences Monday and closes on July 7.

But Oracle faces several steep obstacles in its takeover attempt, starting with the price it's offering. PeopleSoft shares (PSFT) climbed soon after Oracle announced its bid last Friday, and have been trading above $US16 ever since; shares were at $US17.96 in Monday morning trading on the Nasdaq exchange.

Oracle also faces an acrimonious PeopleSoft board. PeopleSoft CEO, Craig Conway, blasted the tender offer. The company plans to soon issue a recommendation to shareholders, after formally reviewing Oracle's offer. But PeopleSoft has in place several antitakeover provisions; unless those were repealed, an actual acquisition of the company by Oracle against the board's wishes would be nearly impossible.

Citing several of those factors, particularly Oracle's lowball offering price, Dutkowsky questioned the company's intentions in making a play for PeopleSoft.

Oracle's real motive was simply to disrupt the planned merger of PeopleSoft and J.D. Edwards, he suggested.

Combining PeopleSoft and J.D. Edwards would offer customers access to a stronger, more diversified company, while an Oracle-PeopleSoft deal would be a consolidating move allowing Oracle to run roughshod over PeopleSoft's customers, Dutkowsky said.

He also forecast a "high likelihood" that government regulators, either in the US or in Europe, would block an Oracle-PeopleSoft combination on antitrust grounds.

"[Oracle's bid would] eliminate at least one of Oracle's major competitors in several market spaces, to the obvious detriment of customers," he said.

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