The world will soon know whether Oracle has secured the support of the 51% of PeopleSoft shares that will keep its $9.3 billion takeover offer on the table.
Both companies have made last minute attempts to argue their case, and Oracle has secured the public support of at least one big name PeopleSoft investor. PeopleSoft CEO Dave Duffield, meanwhile, threatened Oracle with a defamation suit.
Calpers, the California Public Employees’ Retirement System, tendered its PeopleSoft shares to Oracle’s $24-per-share offer. While Calpers’ stake amounts to barely half a percent of PeopleSoft, the organization is one of the most influential investors in the US.
Earlier this week, Capital Guardian Trust tendered its roughly 6%, but Private Capital Management, which has a 9.3% PeopleSoft stake, declined the offer, saying it undervalues PeopleSoft.
Oracle has published an open letter to PeopleSoft shareholders, claiming PeopleSoft’s board continues to unreasonably block the acquisition from going ahead at the expense of shareholder value.
They have responded to our $24.00 best and final offer in characteristic fashion: by attempting to change the subject and issuing what analysts have described as unobtainable financial projections, Oracle chairman Jeff Henley said.
Henley is referring to PeopleSoft’s recent upgrade of its 2005 earnings estimates, which were ambitious enough that several analysts questioned whether the targets were reasonable, or mainly an attempt to force Oracle to raise its bid.
If Oracle gets the 51% support, it does not mean a done deal. A tender does not equate to a definitive agreement to sell at $24. PeopleSoft calls it an informal straw poll. PeopleSoft has a poison pill takeover defense in place that would block the merger.
Oracle says that if it gets the shareholder support it wants, it will ask PeopleSoft’s board, or a court, to have the poison pill plan revoked. There is already a judgment pending from such a court request. There is no guarantee that either strategy will work.
PeopleSoft says that many shareholders who are tendering their shares at $24 think that price is inadequate and are tendering for other, unspecified, reasons. Its board will not necessarily take 51%+ support for Oracle as an endorsement of a $24 merger.
Oracle is expected to use the outcome to bolster its case at a hearing in Delaware next week, assuming it gets the requisite number of tenders. It’s not clear how much weight the straw poll will have on the judge’s decision.
PeopleSoft believes that Oracle will lose the case, and that it will then be forced to attempt a board coup via a proxy contest at PeopleSoft’s next shareholder meeting, expected to be held in the spring.
Separately, PeopleSoft’s Duffield wrote to his counterpart Larry Ellison, asking him to call off his spin-doctors and threatening to file a defamation suit if he does not.
Duffield claimed Oracle was circulating a document to the media that listed Duffield’s PeopleSoft share sales in late 2003, when the Oracle bid was on the table, and encouraging them to find a story there.
Duffield said that all of his share sales during the period were either as part of a predetermined plan over which he quite deliberately has no control, or we made via a charity he is a part of that finds homes for stray cats and dogs.
