PeopleSoft: Oracle's Offer Is Inadequate

"Anyone who wants $21 for PeopleSoft can sell it on the market," Battle said Thursday on the stand during the trial of Oracle's legal challenge to PeopleSoft's antitakeover defenses in Delaware Chancery Court.

PeopleSoft's shares have been trading above Oracle's offer, signaling that investors doubt statements from Oracle executives that the tender offer is likely to be reduced.

Shares of PeopleSoft, which is based in Pleasanton, Calif., traded Thursday morning at $21.38, down 8 cents, on the Nasdaq Stock Market.

Wednesday, near the start of his stint as a witness in the defense of PeopleSoft's corporate antitakeover measures, director Battle indicated the board wants to see what Oracle does once all antitrust blocks are removed.

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"Then it's a matter of determining whether or not Oracle is serious about an offer at a level that's attractive enough to hold promise for enhancing shareholder value," Battle said Wednesday.

On Thursday, the PeopleSoft director said he considered it likely that European antitrust regulators would decide to let the proposed combination go ahead, removing the last exterior barrier to a deal.

What began as a sub-theme of the trial -- PeopleSoft's value to Oracle in a takeover deal -- has come to dominate the action, as attorneys debate the prospects of the two companies if no deal is done.

Oracle has attempted to portray PeopleSoft as a distressed company that has been draining its deal pipeline to appear robust.

Battle said Thursday that PeopleSoft is under stress, but "operating at fever level" to keep revenues coming in from customers nervous about the possibility of a takeover.

"It's not a distressed company at all," he said.

Oracle attorneys have suggested the firing of former chief executive Craig Conway on the eve of the Delaware trial is linked to false statements to analysts in September 2003 and attempts to justify those statements in a deposition.

Conway denies intentionally lying, but admits that during a lengthy unscripted talk with analysts he said the Oracle takeover effort no longer presented PeopleSoft customers with problems.

Customers who had been holding up deals to await the outcome had all closed with PeopleSoft, he said.

The statement, Conway said on the witness stand, wasn't completely true, and should have been qualified by "many" or "most."

"I was promoting, promoting, promoting," Conway explained at his deposition.

Battle said he felt Conway had "gone past cheerleading to something that seems to have raised situational ethics, if your heart is pure."

Conway wasn't fired just because of the misstatements or deposition rationale, Battle said.

PeopleSoft's board had become concerned that the man they had hired to help a young, exuberant company to mature had lost sight of the importance of technological innovation, Battle said.

The company was also in danger of losing its collaborative work style, he said.

As the months of the contest with Oracle wore on, Battle said, board members had become aware that the chief executive was "getting increasingly difficult to work with."

In late December 2003 or January of this year, PeopleSoft directors met with top executives they feared were getting ready to leave due to Conway's management: Phillip Wilmington and chief financial officer Kevin Parker.

The two now share Conway's job as president, while PeopleSoft founder David Duffield returned to the chief executive position.

Redwood Shores, Calif.-based Oracle shares traded Thursday morning at $11.98, down 1 cent, on the Nasdaq.

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