Oracle May Cut Bid for Rival
Oracle Corp.’s hostile $7.7-billion bid for rival software maker PeopleSoft Inc. could drop by one-third to one-fourth to reflect the target company’s poor performance in 2004, Oracle co-President Safra Catz said Monday in a Delaware courtroom.
“The direction is down significantly,” she said in response to questions from her own lawyers.
Catz’s testimony came during testimony in Delaware Chancery Court, where Redwood City, Calif.-based Oracle is seeking to have PeopleSoft’s anti-takeover defenses nullified.
A lawyer for PeopleSoft suggested Catz’s statements and those from other Oracle executives were part of a continuing effort to use the trial as a platform to drive the deal price down below the current offer of $21 a share.
On the stand last week, Oracle Chief Executive Larry Ellison warned PeopleSoft shareholders that the offer on the table was likely to be reduced.
Catz said new financial models were being run. The last models, done in January, expected Pleasanton, Calif.-based PeopleSoft to earn about 85 cents a share in 2004.
At that time, the offering price was $26 a share. No new models were done when Oracle dropped its offer to $21 a share in May, Catz said.
So far, she said, her sense is that PeopleSoft’s 2004 earnings will be “60, 59, 61” cents a share. PeopleSoft seems to be doing “quite poorly” in 2004, she said, and is no longer issuing guidance to let analysts know what earnings are projected.
But presentations to Oracle’s board and assessments by investment bankers contain no references to PeopleSoft as a distressed company, said PeopleSoft attorney Matthew Fischer.
He showed Catz an Oracle analysis in April 2003 that concluded that a $23.76-a-share deal for PeopleSoft would still add to Oracle’s earnings.
She said the analysis was “just a discussion point.”
PeopleSoft has introduced evidence it says showed that Oracle has pursued a strategy of capitalizing on the takeover battle in an effort to keep the target’s share price down.
Fischer also cited favorable reports about PeopleSoft from former Morgan Stanley technology analyst Charles Phillips, who is now Catz’s peer as co-president of Oracle. He wrote that PeopleSoft was positioned well for long-term competition, the lawyer said.
On Nasdaq, Oracle shares rose 3 cents to $12.20 and PeopleSoft shares fell 12 cents to $21.83.
