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Judge gives OK to Oracle\'s PeopleSoft bid
SEPTEMBER 09, 2004 (COMPUTERWORLD) - A federal judge today cleared the way for Oracle Corp. to proceed with its 15-month-old hostile takeover bid for rival PeopleSoft Inc., rejecting the U.S. Department of Justice's effort to block the $7.7 billion offer on antitrust grounds.
In a 164-page ruling issued late today, Chief Judge Vaughan Walker of the U.S. District Court in San Francisco found that the DOJ's attorneys "have not shown by a preponderance of the evidence that the merger of Oracle and PeopleSoft is likely substantially to lessen competition" in the business applications market.
Oracle immediately requested a meeting with PeopleSoft's board of directors and called on PeopleSoft to lift the various poison-pill mechanisms it has put in place to fend off the bid. In a statement, Oracle declared that Judge Walker's decision "removes a significant roadblock to the acquisition."
However, Walker stayed his ruling for 10 days to give the DOJ a chance to file an appeal, and the agency said it's "considering its options" in the case. "We are disappointed in the court's decision," R. Hewitt Pate, assistant attorney general in charge of the DOJ's Antitrust Division, said in a statement. "We believe the facts and evidence in this case support our position that Oracle's proposed acquisition of PeopleSoft would result in a substantial lessening of competition in the markets for high-function human resources management and financial management systems software."
Oracle also faces an ongoing antitrust review by the European Commission. Oracle also needs to overturn PeopleSoft's antitakeover provisions, which it's challenging via a lawsuit filed in Delaware's Court of Chancery. The trial in that case is scheduled to start Sept. 27.
The two rivals are also engaged in a legal battle in California's Alameda County Superior Court, where PeopleSoft has charged Oracle with unfair business practices (see story). Oracle countered with a complaint claiming that PeopleSoft illegally refused to seriously evaluate its bid and improperly created a "customer assurance program" in a bid to make an acquisition very costly for Oracle. That case is scheduled to go to trial in November.
In a statement, PeopleSoft said its board would review the ruling and its implications. The company also pointed out it's seeking compensatory damages of more than $1 billion from Oracle, plus punitive damages, in the lawsuit filed in Alameda County. PeopleSoft spokesman Steve Swasey declined to expand on the statement and said the company won't disclose when its board is scheduled to next meet.
Mitch Myers, vice president of operations at F.W. Murphy Instrumentation & Control Solutions, a PeopleSoft user in Tulsa, Okla., said he's waiting to see more detailed responses from the DOJ and PeopleSoft before making any judgments about the potential impact of Judge Walker's ruling.
PeopleSoft doesn't have to throw in the towel yet, said Paul Hamerman, an analyst at Forrester Research Inc. "I wouldn't underestimate PeopleSoft's resolve to keep this from happening," Hamerman said.
But he added that PeopleSoft, which blamed its weak second-quarter sales largely on the public-relations fallout from the trial between Oracle and the DOJ, now likely will find it even harder to close deals. Hamerman said another company, such as SAP AG, might take the opportunity to step in as a white knight and make an acquisition bid that's more amenable to PeopleSoft's board.
After the judge's ruling was issued, Oracle extended its tender offer for PeopleSoft's stock to Sept. 24. The $21-per-share offer was due to expire tomorrow. Oracle said about 26.5 million shares had been tendered as of today, which represents 7% of PeopleSoft's total number of outstanding shares.
SEPTEMBER 09, 2004 (COMPUTERWORLD) - A federal judge today cleared the way for Oracle Corp. to proceed with its 15-month-old hostile takeover bid for rival PeopleSoft Inc., rejecting the U.S. Department of Justice's effort to block the $7.7 billion offer on antitrust grounds.
In a 164-page ruling issued late today, Chief Judge Vaughan Walker of the U.S. District Court in San Francisco found that the DOJ's attorneys "have not shown by a preponderance of the evidence that the merger of Oracle and PeopleSoft is likely substantially to lessen competition" in the business applications market.
Oracle immediately requested a meeting with PeopleSoft's board of directors and called on PeopleSoft to lift the various poison-pill mechanisms it has put in place to fend off the bid. In a statement, Oracle declared that Judge Walker's decision "removes a significant roadblock to the acquisition."
However, Walker stayed his ruling for 10 days to give the DOJ a chance to file an appeal, and the agency said it's "considering its options" in the case. "We are disappointed in the court's decision," R. Hewitt Pate, assistant attorney general in charge of the DOJ's Antitrust Division, said in a statement. "We believe the facts and evidence in this case support our position that Oracle's proposed acquisition of PeopleSoft would result in a substantial lessening of competition in the markets for high-function human resources management and financial management systems software."
Oracle also faces an ongoing antitrust review by the European Commission. Oracle also needs to overturn PeopleSoft's antitakeover provisions, which it's challenging via a lawsuit filed in Delaware's Court of Chancery. The trial in that case is scheduled to start Sept. 27.
The two rivals are also engaged in a legal battle in California's Alameda County Superior Court, where PeopleSoft has charged Oracle with unfair business practices (see story). Oracle countered with a complaint claiming that PeopleSoft illegally refused to seriously evaluate its bid and improperly created a "customer assurance program" in a bid to make an acquisition very costly for Oracle. That case is scheduled to go to trial in November.
In a statement, PeopleSoft said its board would review the ruling and its implications. The company also pointed out it's seeking compensatory damages of more than $1 billion from Oracle, plus punitive damages, in the lawsuit filed in Alameda County. PeopleSoft spokesman Steve Swasey declined to expand on the statement and said the company won't disclose when its board is scheduled to next meet.
Mitch Myers, vice president of operations at F.W. Murphy Instrumentation & Control Solutions, a PeopleSoft user in Tulsa, Okla., said he's waiting to see more detailed responses from the DOJ and PeopleSoft before making any judgments about the potential impact of Judge Walker's ruling.
PeopleSoft doesn't have to throw in the towel yet, said Paul Hamerman, an analyst at Forrester Research Inc. "I wouldn't underestimate PeopleSoft's resolve to keep this from happening," Hamerman said.
But he added that PeopleSoft, which blamed its weak second-quarter sales largely on the public-relations fallout from the trial between Oracle and the DOJ, now likely will find it even harder to close deals. Hamerman said another company, such as SAP AG, might take the opportunity to step in as a white knight and make an acquisition bid that's more amenable to PeopleSoft's board.
After the judge's ruling was issued, Oracle extended its tender offer for PeopleSoft's stock to Sept. 24. The $21-per-share offer was due to expire tomorrow. Oracle said about 26.5 million shares had been tendered as of today, which represents 7% of PeopleSoft's total number of outstanding shares.
