A majority of PeopleSoft's shareholders gave Oracle the green light to continue its hostile bid for control of the company, tendering more than 60 percent of PeopleSoft's outstanding shares into Oracle's US$24 per share cash offer by the Friday deadline.
The tender result is a blow to PeopleSoft, which hoped to see Oracle's 17-month takeover campaign come to an end. Oracle had pledged to withdraw its offer if it did not receive backing from a majority of PeopleSoft's shareholders.
Oracle is blocked from commencing an acquisition of its software rival by PeopleSoft's board, which opposes the deal. The board can take advantage of provisions in PeopleSoft's bylaws to prevent a hostile takeover. Oracle has asked Delaware's Chancery Court to void those provisions. The two companies will meet Wednesday with Judge Leo Strine, who is preparing a decision on the case.
"We believe it is time to bring this matter to a close, for the good of PeopleSoft's shareholders, customers, and employees," Oracle wrote Saturday in a letter to PeopleSoft's board. The company asked for a meeting this weekend to finalize a deal, which Oracle said it would like to announce before markets open on Monday.
PeopleSoft's board is unlikely to grant that request. Executives cautioned employees and customers this week to be prepared for an unfavorable result in the tender offer, which PeopleSoft cast as little more than a straw poll. "We know that stockholders may tender for a variety of reasons," PeopleSoft presidents Kevin Parker and Phil Wilmington wrote in a letter to employees. "A tender of more than 50 percent of the company's shares does not mean that Oracle will be able to buy those shares or acquire the company."
If the Delaware court declines to void PeopleSoft's anti-takeover provisions, Oracle's next step could be a proxy battle to replace a majority of PeopleSoft's board at its 2005 shareholder's meeting. PeopleSoft is also likely to face a fresh wave of lawsuits from shareholders determined to force a negotiation between the two companies.