At the same time, the database giant has admitted the PeopleSoft board’s defensive maneuvers could indeed stymie its bid.
In a revised version of Oracle’s suit against PeopleSoft, Oracle demands an injunction against the new version of PeopleSoft’s Customer Assurance Program, in which software buyers are offered big refunds in the event of a hostile takeover.
PeopleSoft introduced the program in response to Oracle’s hostile takeover bid. It offers buyers a rebate of between two and four times the purchase price if PeopleSoft is acquired and the acquirer reduces its commitment to PeopleSoft products.
Oracle argues that the revised version of the provisions, used in the third quarter and disclosed in a Securities and Exchange Commission filing October 27, are specifically designed to interfere with Oracle’s bid at the expense of shareholders’ rights.
The new provisions lower the threshold whereby an acquirer’s actions would trigger the refunds. Product delays, reduced support spending, and reduced interoperability with third-party software would all trigger the refunds, currently estimated to total $800 million.
Oracle points out that the PeopleSoft contracts do not bind the current board to the same high standards. The contracts define a successful board proxy contest by a third party such as Oracle as an event that would be classed as an acquisition.
Oracle claims that this is a means to entrench PeopleSoft’s board by creating a set of circumstances where a PeopleSoft shareholder would have to be crazy to vote for a set of directors other than those approved by the incumbent board, due to the liability tightrope the company would subsequently walk.
PeopleSoft’s position is that is protecting its customers’ interests and therefore those of its shareholders. Indeed, it has recorded two stunning quarters of better-than-expected financial results since Oracle’s bid, and the refund offer, emerged, which has boosted its share price.
Oracle executives had stated publicly that the first iteration of the PeopleSoft refund offer, which would have given it more room to maneuver, would not be triggered by the actions Oracle plans to take if the acquisition somehow succeeds.
That appears not to be the case anymore. In a separate motion Oracle casts doubt over whether its takeover bid could proceed with more than $800 million liabilities resulting from PeopleSoft’s refund plan.
Oracle is has been offering $7.3 billion for PeopleSoft, an offer that expires at the end of December. PeopleSoft’s market capitalization is $9 billion, having been boosted by a couple of good quarters since the takeover battle was joined.
This article was based on material originally published by ComputerWire.
