Oracle Corp.'s $24-a-share hostile takeover bid for PeopleSoft Inc. heated up anew yesterday as tonight's deadline for stockholders to offer their shares for sale approached.
The deadline for shareholders to decide whether to tender their stock to Oracle is midnight tonight. Yesterday, the California Public Employees' Retirement System said it had tendered its 1.5 million shares to Oracle.
Calpers's high-profile decision may influence others, since it is the nation's biggest pension fund. "It makes sense economically for our members and our fund to take this action," Calpers said in a statement.
At the same time, a new war of words broke out between the firms. After Oracle began spreading the message that PeopleSoft founder David A. Duffield dumped much of his stock in the company late last year, Duffield sent a strongly worded letter to Oracle chief executive Lawrence J. Ellison threatening to sue him. Duffield said most of the sales were part of an ongoing, prearranged program to diversify his investments, rather than a decision that reflected a lack of confidence in PeopleSoft's future.
"I recently learned that Oracle and its representatives are circulating to the media a chart detailing 'my' sales of PeopleSoft stock in late 2003 and suggesting there is a great story there. If Oracle continues to spread distortions, I will have to consider all appropriate actions, including bringing a claim for defamation," Duffield wrote.
Oracle and PeopleSoft each sell software that automates personnel and payroll functions for companies. Some major shareholders appear to be tendering their stock to Oracle primarily to increase the pressure on the boards of directors at both corporations to negotiate a friendly deal at a higher price.
Earlier this week, Oracle disclosed that Capital Guardian Trust Co., a major PeopleSoft stockholder, planned to tender its shares. PeopleSoft immediately fired back in a statement that Capital Guardian's move had an ulterior motive.
"We have spoken to Capital Guardian . . . and Capital Guardian reiterated that they believe PeopleSoft is worth substantially more than $24 per share," PeopleSoft said in a statement. "Stockholders understand that the tender offer is merely one more step in this lengthy process and may tender their shares for a variety of reasons, even if they share the PeopleSoft Board's strongly held view that PeopleSoft is worth more now than when Oracle made its $26 offer."
Meanwhile, PeopleSoft's biggest stockholder, Private Capital Management LP, with 9.3 percent of the company, said in a public filing that it would not tender its shares to Oracle.
Yesterday, representatives of both technology companies said they anticipate that more than 50 percent of PeopleSoft shareholders will offer to sell their stock to Oracle. However, due to anti-takeover weapons PeopleSoft has in place, the tendering of a majority of its shares to Oracle does not mean the battle will be over.
Instead, other outcomes appear more likely, said people familiar with the deal, who spoke on the condition of anonymity because the deal is still in flux: The companies could negotiate a friendly transaction at a price above $24 a share, or they may end up squaring off in Delaware court next week, where Oracle will seek to have PeopleSoft's anti-takeover provisions thrown out.
The likelihood that Oracle would prevail in Delaware court is extremely remote, experts said. The Delaware courts repeatedly have upheld the chief defense against a takeover -- known as the poison pill -- since the 1980s. Under the terms of the poison pill, if Oracle buys more than 20 percent of PeopleSoft shares, PeopleSoft may issue millions of additional shares for free to its stockholders, making a takeover prohibitively expensive.
Only recently, it appeared that Oracle had the upper hand and was on the verge of acquiring PeopleSoft, when the target company fired its chief executive, Craig A. Conway. Conway, who used to work at Oracle for its billionaire chief executive Ellison, had vowed to fight a takeover.
But this $8.8 billion takeover duel has been anything but typical. Oracle, mindful of the risks of overpaying, chose not to negotiate a friendly takeover by raising its bid significantly in the days after Conway's dismissal.
Since June of last year, when Oracle launched its surprise hostile takeover bid, the company has changed the price it was offering to pay for PeopleSoft four times, veering from $16 a share, to $19.50 to $26 to $21, and now to $24. The roller coaster of bids prompted PeopleSoft to sue Oracle in California for $1 billion, alleging that Oracle was conducting a campaign of unfair business practices that harmed its ability to sell software.
At the same time, Oracle has fought hard in the courts to win control of PeopleSoft. Oracle defied the odds makers by winning a legal victory over the Justice Department, which initially opposed the deal on antitrust grounds. Oracle also won approval of the proposed takeover from antitrust regulators in Europe.