Oracle increases PeopleSoft offer and files lawsuit

Oracle has escalated the hostile takeover battle for PeopleSoft by increasing its offer to $6.3bn and filing a lawsuit against the company.

In a conference call today, Oracle CFO Jeff Henley said the software company has increased its cash offer made on 6 June from $16 a share to $19.50 a share, raising the takeover price from an estimated $5.1bn to $6.3bn.

Oracle has spent the last three days meeting with major PeopleSoft shareholders to try and push the buyout through, said Henley.

“Every shareholder we met recognised the sizeable synergies inherent in this acquisition and that Oracle would become a more significant competitor to Microsoft, SAP and other companies in the software industry.”

Henley then took a swipe at the PeopleSoft board and its decision to acquire JD Edwards.

“The business of PeopleSoft is declining at an accelerating pace. Licence revenues were down 39 per cent in the March quarter compared to 13 per cent decline in Q1 last year. PeopleSoft’s solution for arresting this negative momentum is to buy JD Edwards, a company that has never recorded, even at the peak of the technology spending boom, annual operating margins greater than 11 per cent and it has single digit margins for most of its history.”

Chuck Phillips, executive vice president at Oracle, also revealed the company has filed a lawsuit against PeopleSoft for refusing to allow its shareholders to vote on an Oracle offer.

He said: “We are commencing litigation in Delaware today in order to reverse this pattern of entrenchment and enable that choice. In that suit Oracle contends that PeopleSoft and its board breached their fiduciary duties and failed to act in the best interests of PeopleSoft shareholders.”

Phillips denied reports that Oracle would scrap the PeopleSoft product line and said the company will not eliminate support for PeopleSoft software and will not force customers to migrate to Oracle.

PeopleSoft's board of directors formally rejected Oracle’s original offer last week and its executives have said they will go through with the JD Edwards bid.