22 November 2004 Shareholders of PeopleSoft, the enterprise applications software supplier, have voted in favour of a $9.2 billion hostile takeover from rival Oracle, but the company’s board continues to resist the acquisition.

Directors of PeopleSoft maintain that Oracle’s offer undervalues their company. “The owners of PeopleSoft have spoken and have overwhelmingly chosen to sell to Oracle at $24 a share,” said

Oracle CEO Larry Ellison. PeopleSoft shareholders tendered 60% of the company’s shares to Oracle on Friday.

Peoplesoft’s board responded with a statement describing the price as “inadequate.”

Because of PeopleSoft’s takeover defences, shareholders are not bound to sell the shares. Oracle must now circumnavigate PeopleSoft’s customer assurance programme. This “poison pill” dictates that PeopleSoft software licence holders are entitled to between two and five times the price of their licence should Oracle discontinue software support and updates in the event of a takeover.

“We are obviously at an impasse,” wrote Oracle chairman Jeff Henley in a letter to PeopleSoft’s board, following their rejection of the bid on Saturday. The letter urged the board to drop the poison pill.

Oracle have contested the legality of the provision, and their suit will be heard at Delaware Chancery Court on Wednesday. “Poison pills” have traditionally been endorsed by Delaware law, and Oracle will have to prove that the measure is “draconian, coercive or preclusive.”

Another line of attack for Oracle lies in the nomination of board members sympathetic to its takeover plans at PeopleSoft’s annual meeting next spring – a tactic that has previously failed. Oracle must announce its proposed board members by Thursday of this week.

Meanwhile, PeopleSoft is seeking over $1 billion of damages from Oracle for disrupting its business over the course of the takeover bid. That hearing begins in January of next year.