Court rules for Oracle bid

By Iain Scott, ITWeb group consulting editor

Johannesburg, 10 Sep 2004

US District Judge Vaughan Walker has rejected the US justice department`s attempt to block Oracle`s long-running hostile takeover bid for competitor PeopleSoft.

The judge, ruling in the US District Court, Northern District of California, said the government had failed to prove its contention that the deal would harm competition.

The ruling has revitalised Oracle`s takeover attempt, with the group again extending its offer to buy all of PeopleSoft shares, this time to 24 September.

Both companies` share prices increased on the Nasdaq yesterday, with PeopleSoft rising by 2.63% to $17.95 and Oracle up by 0.71% at $9.93.

Oracle says the court ruling removes a significant roadblock to its acquisition of PeopleSoft.

"This decision puts the onus squarely on the board of PeopleSoft to meet with us and to redeem their poison pill so that the shareholders can accept our offer," says Oracle chairman Jeffrey Henley.

Oracle has claimed consistently that PeopleSoft is using a provision in a customer assurance programme as a "poison pill" against the takeover attempt.

The programme contains a pledge to pay customers back two to five times the cost of software purchases if PeopleSoft is acquired in a hostile takeover.

Damages

PeopleSoft has issued a statement saying its board will review the implications of the judge`s ruling.

"PeopleSoft`s board has carefully considered and unanimously rejected each of Oracle`s offers, including its current offer of $21 per share," it says.

"On 25 May 2004, the board concluded that the current offer was inadequate and did not reflect PeopleSoft`s real value."

It adds that it is claiming compensatory damages of more than $1 billion plus punitive damages in a lawsuit against Oracle, scheduled to go to trial in Oakland, California, on 1 November. The company is alleging that Oracle is disrupting its business.

"The company also noted that the Department of Justice has 60 days to decide whether it will appeal the court`s ruling to the Ninth Circuit Court of Appeals and that the review by the European Commission of Oracle`s bid is ongoing."

European Union anti-trust regulators are expected to rule on the takeover bid within the next few weeks.