Two Major PeopleSoft Shareholders Differ On Oracle Bid

Private Capital Management, which owns a 9.3 percent stake in PeopleSoft, started Tuesday's maneuvering by snubbing Oracle's $24-per-share bid in documents filed with the Securities and Exchange Commission.

Convinced PeopleSoft's stock can still climb higher, Private Capital said it won't pledge, or "tender," its 35 million shares before a midnight Friday deadline that Oracle says will determine whether it continues or abandons its $9.2 billion bid.

Redwood Shores, Calif.-based Oracle tried to trump Private Capital's filing a few hours later by releasing a statement announcing Capital Guardian Trust plans to tender its 37 million PeopleSoft shares--about 10.2 percent of the outstanding stock.

Both Capital Guardian spokesman Chuck Freadhoff and Private Capital spokesman Chad Atkins declined to comment about the respective decisions.

The conflicting stances taken by Capital Guardian and Private Capital illuminate the high-stakes decision facing scores of PeopleSoft shareholders as they weigh the merits of Oracle's offer before it expires Friday night.

If most PeopleSoft shareholders don't tender their shares before the Friday deadline, Oracle has vowed to withdraw its 17-month-old offer and shift its focus to other possible takeover targets.

Should Oracle walk away, industry analysts believe PeopleSoft's stock will plunge by more than 30 percent--a gloomy scenario increasing the pressure on PeopleSoft's shareholders to tender their stakes to keep the bid alive.

Pleasanton, Calif.-based PeopleSoft believes Oracle's ultimatum is pushing many stockholders, including Capital Guardian, to tender their shares even though they think the current offer is inadequate.

"We have spoken to Capital Guardian [Tuesday] ... and Capital Guardian reiterated that they believe PeopleSoft is worth substantially more than $24 per share," PeopleSoft said in a prepared statement. Several other shareholders also have indicated they might tender their shares even though they aren't impressed with Oracle's current bid, PeopleSoft spokesman Steve Swasey said.

Investors who tender their shares hoping it might pave the way for a higher sales price could have the strategy backfire if Oracle leverages the majority support of PeopleSoft shareholders to close the deal at $24 per share, said industry analyst John Torrey of Adams Harkness, an investment banker.

"I think it's going to be a fairly close [decision]," he said.

Oracle has repeatedly said it won't sweeten its current offer. PeopleSoft's board, meanwhile, insists it won't consider selling the company at a price below $26 per share.

Despite the apparent impasses, investors nevertheless appear optimistic a deal can still get done. PeopleSoft's shares gained 20 cents Tuesday to close at $22.74 on the Nasdaq Stock Exchange, where Oracle's shares declined 9 cents to close at $12.92.

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