PeopleSoft To Oracle: Sweeten The Pot

In a letter to Oracle CEO Larry Ellison and Chairman Jeff Henley, PeopleSoft directors said they were willing to consider a sweetened offer.

"Based on the numerous conversations we have had with our largest stockholders over the past ten days, our Board is convinced that a majority of our stockholders agree that your $24 offer is inadequate and does not reflect PeopleSoft's real value," wrote A. George "Skip" Battle, a PeopleSoft director and chairman of its Transaction Committee. "This majority is comprised of stockholders who did not tender their shares, as well as stockholders who tendered but told us that they believe PeopleSoft is worth more than $24 per share."

The letter was released Saturday night after a meeting of the board. At 1 a.m. Saturday morning, just an hour after the latest tender offer expired, Oracle claimed to have 60 percent of PeopleSoft shares outstanding pledged to its bid, and characterized that as a mandate for its purchase.

But even that win was a mixed signal, with Wall Streeters saying that some institutional investors and arbitrageurs voted for the offer in hopes of continuing negotiations and boosting the price. Oracle has said, and reiterated early Saturday, that the current $24-per-share all-cash bid on the table is it's "best and final" offer. When Oracle stunned PeopleSoft with its unsolicited bid in June, 2003, it offered $16 per share, or about $5.1 billion. It has since raised its bid three times, and extended the offer 15 times in 17 months.

Oracle's next step will likely be to get a Delaware chancery court to throw out PeopleSoft's anti-takeover defenses, or poison pill provisions. A hearing towards that end is expected this week.

In case there was any ambiguity, Battle signed off his letter saying: "If Oracle is prepared to offer an appropriate price that reflects both PeopleSoft's intrinsic value and our value to Oracle, please contact me directly."

For continuing coverage, see CRN's Oracle-PeopleSoft news center.