PeopleSoft: Justice officials recommend against Oracle takeover

IDG News Service - Officials in the U.S. Department of Justice antitrust division have recommended that the department block the proposed acquisition of PeopleSoft Inc. by rival Oracle Corp., PeopleSoft said in a statement yesterday.
The staff recommendation has been submitted to the office of the assistant attorney general, and the DOJ will make a final decision no later than March 2, PeopleSoft said.
PeopleSoft offered no further comment, but Oracle said the recommendation doesn't represent a final decision.
"This process is simply not complete," James Rill of Oracle's counsel, Howrey, Simon, Arnold & White, said in a statement. "I have seen many instances in which the assistant attorney general's decision differed from that recommended by the investigating staff. In my experience, the assistant attorney general will take ample time to review the facts of this situation with an open mind and meet with Oracle before coming to a decision on the matter."
The announcement comes a few days after Oracle upped the stakes in the 8-month-old takeover battle by increasing its offer to $9.4 billion (see story), and just one day after Oracle CEO Larry Ellison appealed in a letter to PeopleSoft stockholders to allow him to use their proxy votes to gain representation on PeopleSoft's board at that company's annual general meeting on March 25.
Oracle originally offered to buy PeopleSoft -- a competing maker of enterprise software -- last June, when Oracle offered shareholders $16 per share, or $5.1 billion. That figure rose after PeopleSoft's acquisition of J.D. Edwards & Co. and as Oracle has sweetened its offer to try to sway PeopleSoft shareholders.
In his letter, Ellison said PeopleSoft's board isn't acting in the best interest of the company's shareholders.
"The PeopleSoft Board continues to refuse to meet with us to discuss the merits of the transaction despite the fact that our offer represents a premium of approximately 19% over PeopleSoft's closing price on ... the last trading day before our announcement of the increase in our cash tender offer," Ellison wrote. "The independent candidates (for the board) nominated by Oracle believe that the stockholders -- the owners of PeopleSoft -- are entitled to make a decision on whether or not to accept Oracle's offer."
Oracle also said PeopleSoft had initiated the idea of the two companies working together.
"The initial proposal to merge PeopleSoft's applications business with Oracle's applications business came from PeopleSoft CEO Craig Conway, who proposed that he was the best person to run the combined companies' applications business and never mentioned any antitrust concerns," Oracle spokesman Jim Finn said in a statement.
Oracle has been trying to get more than half of PeopleSoft's 361 million shares tendered, but just before the latest price offer had secured only 10.6 million shares, or 2.9% of PeopleSoft's outstanding shares, according to an Oracle statement.