PeopleSoft Rejects Rival Oracle’s Latest Takeover Bid of $9.4 Billion

Business software maker PeopleSoft Inc. on Monday rejected a sweetened $9.4-billion takeover offer from rival Oracle Corp., saying the hostile bid still undervalues the company.

PeopleSoft, of Pleasanton, Calif., said its board considers the $26-a-share bid inadequate, though it represents at 33% increase over Oracle’s previous offer of $19.50 a share. It urged shareholders to reject the bid.

An Oracle spokesman said the company stands by its offer, which was made last week.

“Given PeopleSoft’s uncertain future as a stand-alone company and the fact that, for the first quarter, PeopleSoft guided analysts below the consensus estimates, Oracle believes that its offer is full and generous,” said Oracle spokesman Jim Finn.

The rejection prolongs a contentious eight-month takeover battle. Redwood City, Calif.-based Oracle has proposed replacing five of PeopleSoft’s board members with its own nominees at the PeopleSoft annual meeting March 25. With PeopleSoft’s rejection of the sweetened takeover offer, the vote at the meeting takes on added significance.

The two sides are awaiting a U.S. Department of Justice ruling on whether a merger would be anti-competitive. PeopleSoft contends it would be, while Oracle’s raised bid was viewed by some as a sign the pursuer was confident the deal would be allowed to proceed.

Regardless of the Department of Justice ruling, PeopleSoft said, the Oracle offer “does not begin to reflect the company’s real value.”

Specifically, PeopleSoft noted its current share price of $22.75 represents the low end of its historical valuation range and lower multiples than its peers. It said this is due primarily to the uncertainty created by the Oracle bid.

Wells Fargo Securities analyst Eric Upin said he would not be surprised to see Oracle increase its offer if PeopleSoft were to show a willingness to negotiate a friendly offer.

On Nasdaq, PeopleSoft fell 53 cents to $22.22 while Oracle dropped 14 cents to $13.28.