13 June 2003 The saga surrounding Oracle’s hostile takeover bid for PeopleSoft took a dramatic new turn last night as PeopleSoft merger partner JD Edwards launched a multi-billion dollar lawsuit against Oracle and accused leading Oracle executives of “espionage”.
JD Edwards, the Colorado-based enterprise resource planning (ERP) software supplier, said it filed a suit in a local court claiming that Oracle had “tortuously interfered with its proposed [$1.7 billion] merger with PeopleSoft”. The suit seeks $1.7 billion in compensation and an unspecified amount in punitive damages.
JD Edwards accused Oracle of launching its hostile offer for PeopleSoft in order to disrupt its friendly merger with PeopleSoft, announced only days earlier. PeopleSoft’s board of directors unanimously rejected Oracle’s $5.1 billion bid yesterday, prompting speculation that Oracle will raise its offer.
“We will not sit by idly while Oracle pursues this arrogant, unlawful and destructive course of action,” said JD Edwards CEO Bob Dutkowsky.
At the same time, JD Edwards filed a second lawsuit with a court in California, which alleges, among other things, that Oracle sales people contacted JD Edwards customers and urged them to delay ordering and implementing JD Edwards’ products.
The suit also contains extraordinary allegations about the conduct of Oracle CEO Larry Ellison and the company’s new recruit as executive vice president, Chuck Phillips, the former Morgan Stanley star enterprise applications analyst. The men, the suit alleges, engaged in “industrial espionage” to undermine the proposed PeopleSoft-JD Edwards merger.
The suit claims that Phillips, who joined Oracle in May 2003, worked with JD Edwards executives in the run up to the PeopleSoft deal.
“He did not disclose to JD Edwards that he planned to use the information and insights acquired from his discussions with JD Edwards’ executives in order to assist Oracle in illegal efforts to harm JD Edwards’ business,” claims the suit.
Oracle said the lawsuits had “no merit”. “Clearly PeopleSoft and JD Edwards prefer to fight in the courts than let shareholders decide,” Oracle said. Phillips has made no comment.
