Oracle Claims Mandate, Victory In PeopleSoft Battle

Just an hour after the company's self-imposed deadline for gaining 50 percent of PeopleSoft's outstanding shares tendered, Oracle said it surpassed that goal. The company had said if it did not garner at least 50 percent of the shares by midnight Friday, it would drop its 17-month-long quest for PeopleSoft, a rival in business applications.

At 1:00 a.m. Saturday, the database giant said that 228,702,471 shares of PeopleSoft common stock, or more than 60 percent of outstanding shares, were tendered in favor of its $24-per-share bid.

The company is now calling for PeopleSoft to withdraw its poison pill anti-takeover defense and allow the $9.2 billion deal to proceed.

In a letter to PeopleSoft management and released to the press, Oracle Chairman Jeff Henley and CEO Larry Ellison said it is time to bring the 17-month-old battle to a close. "We are prepared to complete and pay for the acquisition of all outstanding shares of PeopleSoft upon satisfaction of the remaining conditions, which are all in your control," they wrote.

The two executives reiterated that this is "our best and final all cash offer."

"Given that a majority of PeopleSoft's owners are now prepared to sell at $24.00 per share, we are requesting the Board immediately redeem the poison pill and exempt the transaction under Delaware Section 203. We also request a meeting to finalize a definitive merger agreement at $24.00 per share with the goal of announcing a deal prior to market open on Monday, November 22, 2004," Henley and Ellison wrote.

Some stakeholders still believe Oracle may sweeten the bid, despite its protestations to the contrary. Throughout this saga, some Wall Streeters have said PeopleSoft could fetch up to $27 per share. On Thursday, several told CRN they expected Oracle to get the shares it required. At the very least, arbitrageurs and large stakeholders want to keep the bid going in hopes of a higher bid, they said.

At press time, PeopleSoft had not responded to Oracle's statement, but the company has repeatedly rejected Oracle's proposal.

Since Oracle launched its surprise, and very hostile, bid in June of 2003 at $16 per share or about $5.1 billion, the tender offer has been extended 15 times. The price has been raised three times—and lowered once.

The epic battle has taken its toll. PeopleSoft fired its high-profile CEO Craig Conway last month.

Oracle CEO Larry Ellison has long said that the software business, including the high-margin enterprise applications market, is consolidating, and that only a few, very big players will remain viable, with point-solution providers fading away.

Whether or not it completes the purchase, it is clear Oracle will pursue more business applications business. Some PeopleSoft partners who oppose a buyout said the beneficiaries of a converged Oracle PeopleSoft would be SAP, the ERP power, and Microsoft which is trying to enter the business applications market, although it is initially targeting customers in smaller companies.

Oracle has struggled to branch out beyond its bread-and-butter database business into other areas. With its own financial and e-business applications, its application server, and other offerings, it is trying to propagate as much of its software stack as possible. The end-game is to become a full-fledged platform provider, which would put the company in direct competition with arch-rivals Microsoft and IBM.

For more coverage, see PeopleSoft-Oracle News Center.