PeopleSoft rejects latest Oracle offer

The company's board unanimously rejected Oracle's offer of $26 per share

PeopleSoft Inc. has rejected the latest bid from unwanted suitor Oracle Corp., which has been attempting to buy the company out since last summer in a hostile takeover attempt.

The Pleasanton, Calif.-based PeopleSoft today announced that its board had unanimously rejected Oracle's latest offer of $26 per share, which represents a 33% increase from its earlier offer and now totals about $9.3 billion. As part of its decision, the board urged that PeopleSoft shareholders not tender their shares.

"The revised offer price is inadequate and does not reflect PeopleSoft's real value," the company said in a statement. "The proposed combination of PeopleSoft and Oracle continues to face substantial regulatory scrutiny in both the United States and Europe and there is a significant likelihood that the transaction will be prohibited under antitrust law."

Oracle nevertheless hopes to tip the scales by fielding its own slate of directors, who will be voted on at the annual meeting of stockholders on March 25.

In a statement issued today, Oracle said: "Since PeopleSoft's current directors persist in their refusal even to discuss the offer with Oracle, PeopleSoft stockholders can act in their own best interests by tendering their shares and voting to elect the slate of five independent directors to the PeopleSoft board. PeopleSoft stockholders are urged to review carefully Oracle's forthcoming Proxy Statement."

The $26-per-share offer was Oracle's first serious bid, and "should have users nervous," said John Moore, an analyst at ARC Advisory Group Inc. in Dedham, Mass. He also said that it will ultimately be institutional investors who decide the takeover effort. "Based on the lackluster response of the market to Oracle's latest bid, it looks like most investors are sitting on the sidelines till the Department of Justice ruling is made public," he said.

Oracle has said it expects the government to render a decision by March 12.

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