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PeopleSoft Willing to Deal With Oracle

From Dow Jones/Associated Press

PeopleSoft Inc.'s board is prepared to drop its ferocious resistance to Oracle Corp.'s hostile takeover bid and negotiate a price above the current $7.7-billion offer if there’s “high certainty” a deal can be done quickly, a company director said Tuesday.

PeopleSoft director Steven Goldby’s remarks raised the possibility of a friendly deal for the first time since Oracle launched its bid 16 months ago. He was testifying during a Delaware trial prompted by Oracle’s challenge to two defensive measures designed to derail the proposed marriage between the rival makers of business software.

Redwood City, Calif.-based Oracle is asking Delaware Chancery Court Judge Leo Strine to remove the anti-takeover provisions; Pleasanton, Calif.-based PeopleSoft is seeking to preserve them. Goldby’s remarks during his second day of testimony contrasted sharply with the disdainful attitude that PeopleSoft executives have displayed toward Oracle’s offer throughout the saga.

PeopleSoft’s board has unanimously rejected Oracle’s bid on four occasions and ignored all requests to meet with its unsolicited suitor.

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“If there is ever an indication that Oracle is willing to pay ... the right price for the shareholders to get for this company, and there is a high certainty of being able to close a transaction quickly, I, personally, would be open to discussions with Oracle,” Goldby testified. “Now, it’s a matter the full board would need to consider at the time.”

Goldby’s conciliatory tone left investors and industry analysts wondering whether his testimony signaled a change of heart at PeopleSoft coupled with the recent firing of the combative Craig Conway as chief executive, or whether it was simply more posturing in the lengthy soap opera.

“It’s a fascinating turn of events, but it’s so tricky to know what it really means,” said analyst Richard Williams of Garban Institutional Equities. “Hearing it makes you think it increases the odds of Oracle getting the deal done, but [Goldby] almost had to say the board will consider a deal or it would come across like the board is breaching its fiduciary duty.”

PeopleSoft spokesman Steve Swasey said Goldby’s remarks were consistent with all the discussions the board has had throughout the more than 80 meetings that have been held since Oracle first made its offer.

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“There’s no surprise here,” Swasey said. “This is just the first time that a PeopleSoft director has articulated the board’s thoughts in public.”

Oracle declined to comment on Goldby’s testimony.

Investors continued to bet that Oracle would snap up PeopleSoft by raising its bid above the current all-cash offer of $21 a share.

PeopleSoft’s shares gained 63 cents to $22.83 on Nasdaq, where Oracle climbed 34 cents to $12.21.

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