Reflecting the uncertainty that has always swirled around Oracle's hostile bid for control of PeopleSoft Inc., two major PeopleSoft shareholders have reached opposite conclusions on how to cast their votes on Oracle's buyout offer.
Florida investment firm Private Capital Management said it will not tender its shares into Oracle's offer. Oracle countered that news with an announcement that institutional investor Capital Guardian Trust has decided to tender its shares.
Private Capital Management controls 35.1 million PeopleSoft shares, 9.3 percent of PeopleSoft's outstanding total. Capital Guardian controlled 21.8 shares according to a regulatory filing from earlier this month, giving it a 5.9 percent stake.
Capital Guardian is part of Los Angeles-based The Capital Group Companies, which also includes other funds that own an additional 4.3 percent of PeopleSoft's shares. A Capital Group spokesman declined to comment on how those other shares will be voted, or to confirm Oracle's report on Capital Guardian Trust's voting intentions.
Most investors are likely to wait until the last minute to tender shares, even if they have made their decisions in advance. Oracle has given PeopleSoft shareholders until midnight on Friday, Eastern time, to accept its US$24 per share cash offer. If a majority of PeopleSoft shares are not tendered by the deadline, Oracle says it will walk away and end its sixteen-month campaign to buy PeopleSoft.
PeopleSoft, whose board opposes the deal, has a running start in gathering the support it needs to keep the shares tendered to Oracle below the 50 percent threshold. Company founder David Duffield, who returned as chief executive officer last month when PeopleSoft's board ousted Craig Conway , has a sizable ownership stake in the company, estimated at more than 7 percent. PeopleSoft insiders control 10 percent of the company's shares.
Private Capital Management said in a regulatory filing that it has "significant concerns" about whether Oracle's bid, which Oracle now values at US$9.2 billion, represents a better return for shareholders than PeopleSoft would be able to generate as an independent company.
Redwood Shores, California-based Oracle and Pleasanton, California-based PeopleSoft executives are on the road this week lobbying key institutional investors. Two Oracle leaders, President Safra Catz and Chief Financial Officer Henry You, shredded PeopleSoft's prospects and cast aspersions on its board's honesty at a presentation Monday for shareholders, arranged by investment research and advisory firm Glass, Lewis & Co. Glass, Lewis said PeopleSoft rejected its offer to participate in a similar forum.
PeopleSoft's J.D. Edwards & Co. acquisition "was the failure we expected it to be," Catz said. She expressed doubt PeopleSoft will be able to live up to its board's earnings projections for 2005.
You emphasized that Oracle's US$24 per share offer will not be raised, and that if the PeopleSoft offer fails, Oracle will move on to other targets on its list of potential acquisitions -- which he declined to name.
"PeopleSoft is strategically important to Oracle but it is not critical," You said. "$24 is our point of strategic indifference."