Oracle Delays Attempt to Quash Poison Pill
Oracle Corp., the world’s third-largest business software company, on Monday temporarily postponed its legal challenge to rival PeopleSoft Inc.’s “poison pill” takeover defense as U.S. regulators review the transaction now valued at about $7.5 billion.
Oracle last month offered $19.50 a share for PeopleSoft, which took control of J.D. Edwards & Co. on July 18 in a $1.8-billion acquisition. That made PeopleSoft the second-largest maker of business software used for tasks such as processing payroll and tracking inventory. Shares of PeopleSoft, which has rejected Oracle’s bid, fell to less than $17 on Monday.
The two rivals have been pursuing acquisitions to compete with SAP, the German company that dominates the $20.6-billion business software market with a 36% share. PeopleSoft and J.D. Edwards combined have 14% of the market, compared with Oracle’s 13%, according to AMR Research Inc.
Oracle and PeopleSoft agree that “it would be premature to fix a hearing date because of the government’s antitrust review of the Oracle tender offer,” PeopleSoft lawyer Peter J. Walsh Jr. wrote to Judge Leo Strine Jr. in Delaware Chancery Court papers made public Monday.
Oracle sued PeopleSoft on June 18, asking Strine to invalidate the poison pill, which would provide shareholders with low-cost stock, flooding the market and making a hostile takeover prohibitively expensive. Two court dates this month, the latest on Friday, have been canceled.
PeopleSoft Chief Executive Craig Conway has said that a combination with Oracle would not pass regulatory muster. The Justice Department sought more information on the proposal, and a PeopleSoft user, the Connecticut state government, sued Oracle in federal court.
“Both companies agreed to report back to the court in mid-September” to decide on possible hearing dates, said Deborah Lilienthal, an Oracle spokeswoman.
“Oracle asked us for a delay and we agreed,” PeopleSoft spokesman Steve Swasey said.
In the letter to the judge, PeopleSoft lawyers also asked Strine not to block the company from pursuing unfair-competition claims in a Superior Court lawsuit in California.
Oracle’s tender offer, the letter says, is “interfering on an ongoing basis with PeopleSoft’s customer relationships and its ability to attract new customers,” and PeopleSoft is seeking “damages in the hundreds of millions of dollars.”
Oracle, headquartered in Redwood City, Calif., reported $9.47 billion in fiscal 2003 sales. Its shares fell 22 cents on Monday to $11.88 in Nasdaq trading.
Among Oracle’s $300 million in bond debt are $150 million in senior callable notes due next year.
Shares of Pleasanton, Calif.-based PeopleSoft fell 1 cent to $16.82 on Nasdaq. The company had $1.94 billion in fiscal 2002 sales.
