J.D. Edwards CEO: Oracle's bid will raise antitrust flags

Oracle Corp.'s proposed hostile takeover of PeopleSoft Inc. would be disastrous for both current PeopleSoft customers and for the competitive dynamics of the enterprise software market, J.D. Edwards & Co. Chairman and Chief Executive Officer (CEO) Bob Dutkowsky said Monday during a press conference opening Quest Global 2003, J.D. Edwards' annual customer conference, in the company's hometown of Denver.

J.D. Edwards agreed last week to be taken over by Pleasanton, California-based PeopleSoft. Oracle's surprise bid for PeopleSoft places in jeopardy that agreement, which must be approved by shareholders of both J.D. Edwards and PeopleSoft.

Oracle, in Redwood City, California, filed Monday with the U.S. Securities and Exchange Commission papers detailing its bid, which offers PeopleSoft stockholders US$16 per share, for a total takeover price of US$5.1 billion in cash. The tender offer commences Monday and closes on July 7.

But Oracle faces several steep obstacles in its takeover attempt, starting with the price it's offering. PeopleSoft shares (PSFT) climbed soon after Oracle announced its bid Friday, and have been trading above US$16 ever since; shares were at US$17.96 in Monday morning trading on the Nasdaq exchange.

Oracle also faces an acrimonious PeopleSoft board. PeopleSoft CEO Craig Conway blasted the tender offer. The company plans to soon issue a recommendation to shareholders, after formally reviewing Oracle's offer. But PeopleSoft has in place several antitakeover provisions; unless those were repealed, an actual acquisition of the company by Oracle against the board's wishes would be nearly impossible.

Citing several of those factors, particularly Oracle's lowball offering price, Dutkowsky questioned the company's intentions in making a play for PeopleSoft. Oracle's real motive is simply to disrupt the planned merger of PeopleSoft and J.D. Edwards, he suggested.

Analysts at the event seemed worried Oracle will succeed in its uncertainty campaign. Many of the questions Dutkowsky fielded concerned J.D. Edwards' plans for persuading PeopleSoft shareholders that the acquisition of J.D. Edwards is worth proceeding with.

Combining PeopleSoft and J.D. Edwards will offer customers access to a stronger, more diversified company, while an Oracle-PeopleSoft deal would be a consolidating move allowing Oracle to run roughshod over PeopleSoft's customers, Dutkowsky said. He also forecast a "high likelihood" that government regulators, either in the U.S. or in Europe, would block an Oracle-PeopleSoft combination on antitrust grounds.

"(Oracle's bid would) eliminate at least one of Oracle's major competitors in several market spaces, to the obvious detriment of customers," he said.

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