Update: Oracle Sticks To Its Guns On PeopleSoft Deal

"Let us be clear that we remain committed to acquiring PeopleSoft. There's no merit to the proposition that the deal is dead. Ironically, all the people declaring it dead have no ability to make that determination. It's not up to them," Chuck Phillips, an Oracle executive vice president, told analysts and reporters on a conference call Monday afternoon.

Still, the deal has to make sense in the long run. Oracle will not "pay any unreasonable price for assets just to claim victory," he noted. Oracle's stance has been that PeopleSoft is hurting its own shareholder value with efforts to forestall Oracle's purchase, now valued at about $7.5 billion in cash.

Since Oracle first bid on PeopleSoft in June, there has been a flurry of legal claims and counterclaims between the companies. Some PeopleSoft shareholders are now suing that company as well.

Since PeopleSoft completed its acquisition of J.D. Edwards (plans for which were announced just days before Oracle launched its surprise offer for PeopleSoft), there has been some feeling that Oracle Chairman Larry Ellison has lost his taste for the company.

Oracle executives said that is not the case. "We remain absolutely convinced that the combined apps business will be good for competition, good for investors, good for customers," Phillips told an array of financial analysts and reporters on the call.

Oracle's hostile bid is facing regulatory review in the United States and European community as well as PeopleSoft's own oft-expressed intransigence. Safra Catz, an Oracle executive vice president credited with being a longtime adviser to Ellison, said both processes are moving along as predicted.

"We expect to certify substantial compliance with the Department of Justice within the next few weeks and then make our affirmative case with them, a compelling description of why this is pro-competitive," she noted. She said she expects a decision early next year. With the European community, the entire process will occur in a 120-day window, she noted. "One-hundred and twenty days is the outside date. We hope to conclude that process more quickly."

The Oracle executives said recent PeopleSoft moves are geared to derail Oracle's bid, to the detriment of PeopleSoft shareholders.

For example, they cited a filing PeopleSoft made to the U.S. Securities and Exchange Commission earlier this month. It outlined an amended bylaw extending the period in which stockholders can nominate board members. That period has been extended from 20 to 120 days.

Oracle charged that the change was made to make it harder to nominate and elect independent board members, a slate of which Oracle is preparing. Four of PeopleSoft's eight board members are up for election at the next annual meeting slated for May, according to a spokesman for that Pleasanton, Calif.-based company.

Another bone of contention continues to be PeopleSoft's Customer Assurance Program, which was initially viewed as a way to protect investments in existing PeopleSoft products should the company get acquired and those products be cut.

In October, PeopleSoft filed a change to that plan, saying that the Customer Assurance Program could be triggered by a change in its own board, not by an acquisition. PeopleSoft quickly retracted that change but also extended the nomination period.

PeopleSoft instituted the changes as a plan to ensure continued development and support of its current products. Wording of Oracle's initial bid indicated what appeared to be plans to discontinue PeopleSoft products in favor of Oracle's. Oracle executives quickly backtracked, promising to support PeopleSoft's existing products for up to 10 years. Such a pledge made the initial Customer Assurance Program plan a "moot point," according to Oracle.

For more on this story, see CRN's CRN's PeopleSoft news center.