PeopleSoft balks at Oracle takeover bid
- 11 June, 2003 07:35
PeopleSoft CEO, Craig Conway, has come out strongly against the surprise hostile takeover bid launched by Oracle, calling it “atrociously bad behaviour”.
The offer is nothing but a competitive strike to disrupt the acquisition of J.D. Edwards, Conway said.
PeopleSoft and its board of directors will review the Oracle offer and will provide a recommendation to shareholders. In the meantime, PeopleSoft advises its shareholders to take no immediate action.
PeopleSoft's board is planning to meet this weekend, a PeopleSoft spokesperson said. She would not say if Oracle CEO, Larry Ellison, has been invited to that meeting.
Ellison - in an interview on CNBC prior to Conway’s remarks - said Conway was the first to bring up a merger between PeopleSoft and Oracle about a year ago.
“Craig Conway, the CEO of PeopleSoft, called me on the phone about a year ago and said he wanted to put the two applications businesses together," Ellison said. "It really was their idea to choose us as a partner in the applications space.
“We couldn’t agree on structure and we couldn’t agree on price back then, so we now made an alternative and decided to go directly to PeopleSoft shareholders.”
Prior to joining PeopleSoft in May 1999, Conway had spent eight years at Oracle as executive vice-president of marketing, sales, and operations, according to PeopleSoft's website.
Oracle is offering $US5.1 billion cash, or $US16 per share, to acquire PeopleSoft. Oracle plans to stop selling PeopleSoft products to new users, but continue support for current users while encouraging those users to switch to Oracle applications. Industry analysts say PeopleSoft users are in for a rough transition if the takeover happens.
The enterprise application vendor, like many large US companies, has measures in place to prevent a hostile takeover. This includes a shareholder rights plan known as a “poison pill”, which will increase the price of acquiring shares to a prohibitive level when a takeover bid is launched, financial analysts said.
Oracle CFO, Jeff Henley, wouldn't divulge if Oracle would increase its offer.
“We’ve made what we think is a very good, sound offering,” he said.
Ellison said Oracle’s offer to PeopleSoft shareholders beat PeopleSoft’s plan to buy J.D. Edwards.
“We are offering the PeopleSoft shareholders a compelling alternative to this very risky merger with J D Edwards,” Ellison said.