In settling shareholder class actions, PeopleSoft refined the terms of its Customer Assurance Program, the anti-takeover measure that offers customers refunds of up to five times their license fees if the firm is acquired and major product changes are made.
PeopleSoft has agreed to change the CAP, if it is renewed after June 30, so that it would only come into play if Oracle, and only Oracle, is the acquiring company. Previously, the contract did not specify an acquirer.
The company has also agreed to modify the terms of its shareholder rights plan, the so-called poison pill program that floods the market with new shares in the event of a hostile takeover, as a means to force acquirers to negotiate with the PeopleSoft board.
PeopleSoft said it will change this program so that only the independent directors of its board have the authority to activate the poison pill. This change will be in effect for the next two years, the company said.
Some money is changing hands. PeopleSoft said it will pay the plaintiffs legal fees and expenses, an amount to be approved by the court. The court also has to approve the other terms of the settlement, the company said.
Also yesterday, PeopleSoft’s board said it recommends shareholders rejected Oracle’s latest offer, which at $21 per share is $5 below the last offer it rejected, but still a 21% premium of PeopleSoft’s share price when the offer was made.
The Board concluded that the reduced offer is inadequate and does not reflect PeopleSoft’s real value, the firm said in a statement. The Board also believes that there is a significant likelihood that the transaction will be prohibited under antitrust law.
Oracle is currently fighting off antitrust charges in the US and Europe, and is widely believed to have a tough fight on its hands. Oracle claims its acquisition of PeopleSoft would not have any anticompetitive effects on the business software market.
PeopleSoft said its board’s decision was reached after a review of the offer by its Transaction Committee of independent directors, including input from outside advisors including Citigroup Global Markets Inc and Goldman, Sachs & Co.
