PeopleSoft Investors Support Takeover Offer From Oracle

Oracle Corp. said late Friday that its $8.8 billion offer to buy Silicon Valley software rival PeopleSoft Inc. won majority support from PeopleSoft investors, making an eventual takeover more likely.

Oracle announced the results after the $24-a-share offer closed at midnight on the East Coast. The company said it got more than 60% of PeopleSoft’s shares, enough to ensure that Oracle will continue its 17-month campaign to buy the Pleasanton, Calif., company.

Oracle called on PeopleSoft’s board to drop its “poison pill” takeover defense, which still blocks Oracle from taking control of the maker of software for managing such tasks as payroll and accounting. Oracle sells similar programs as well as the underlying databases for storing large amounts of data.

In a letter to PeopleSoft, Oracle Chief Executive Larry Ellison asked for immediate talks aimed at producing a deal before the markets opened on Monday. PeopleSoft gave no immediate response, but in recent days it had pledged to keep fighting. Analysts said they doubted the company would change its mind.

The two sides are set to meet Wednesday, when Oracle will ask a Delaware judge to void the poison pill, a device that makes a hostile acquisition prohibitively expensive, as being against the shareholders’ interests.

If that fails, Oracle is expected to nominate a slate of candidates for PeopleSoft’s board. If elected at the company’s annual meeting next year, they could drop the defense and agree to a sale.

With 60% support, “they can probably get their slate in,” said analyst Brendan Barnicle of Pacific Crest Securities.

Oracle’s victory Friday had been expected. The Redwood City, Calif., company had promised to end the effort if it failed to get majority shareholder support.

Lobbying against a sale, PeopleSoft directors met with investors this week in New York to explain their plan for increasing the company’s earnings, which they said should drive the stock higher than Oracle’s offer.

But several analysts said they had a hard time accepting PeopleSoft’s projections. Merrill Lynch & Co. analyst Jason Maynard said executives hadn’t spelled out where they would cut costs or why they believed market conditions would improve.

Oracle executives said they planned to cut PeopleSoft jobs and other expenses and combine the firm’s business programs with Oracle’s less successful management software operation, creating a new industry No. 2 behind Germany’s SAP.