27 August 2003 Oracle recognised that its hostile takeover bid of PeopleSoft had damaged its target’s business and was making its $7.3 billion offer appear increasingly attractive, documents filed in a US court suggest.
Internal emails of Oracle employees, released yesterday as part of PeopleSoft’s lawsuit against its would-be acquirer, appear to indicate that Oracle knew that its tactics were disrupting PeopleSoft.
“We’ve certainly wounded PSFT [PeopleSoft’s ticker symbol]. Even if we don’t end up closing the deal, this is going to take PSFT time to recover,” one Oracle employee wrote the day after the bid was announced in June 2003.
In an email to an analyst, Oracle’s vice president of analyst relations, Peggy O’Neill, wrote that “obvious customer advice such as ‘wait on purchases until this is over’ should be highlighted.”
Another email, referring to Oracle’s opening bid of $16-per-share, said: “The more something hurts PSFT, the more likely that [PeopleSoft’s] share price drops and $16 starts to look better.” Oracle eventually raised its offer to $19.50-per-share after PeopleSoft rejected its opening bid.
Oracle said the sections of the emails being widely reported were taken out of context. The complete content of all the emails and documents released yesterday did not suggest Oracle wanted to damage PeopleSoft’s business, but rather that PeopleSoft should not refuse the “exciting opportunity” offered by Oracle’s bid, the company said.
Oracle welcomed the release of the documents, which PeopleSoft had originally asked to be sealed. “Oracle has nothing to hide in its legitimate effort to acquire PeopleSoft. We are confident that we will successfully defend against the [PeopleSoft legal] action and we are unwavering in our commitment to acquire PeopleSoft,” an Oracle spokeswoman said.
The release of the emails comes at a critical moment in the long-running saga. PeopleSoft expects to close its $1.8 billion agreed takeover of business software rival JD Edwards later this week. The announcement of the PeopleSoft-JD Edwards deal prompted Oracle to launch its daring bid for PeopleSoft. The antitrust investigation into the Oracle-PeopleSoft bid is likely to run for another three months.
In another development yesterday, PeopleSoft moved to limit the damage of Oracle’s hostile takeover bid by again offering its money-back guarantee to customers.
In the final weeks of June 2003, PeopleSoft promised its customers that it would refund payments equal to 2-5 times their software licence fees if PeopleSoft was acquired and its acquirer discontinued support or development of its products.
The temporary offer was included in about half of PeopleSoft’s deals in the June quarter and is now being extended to cover deals struck in the final weeks of the September quarter.
Meanwhile, antitrust lawyers in the US are understood to be planning to interview hundreds of customers, consultants and competitors of PeopleSoft, JD Edwards and Oracle as part of their ongoing review.
Unconfirmed reports in the US say that companies with more than $250 million in revenue and at least 1,000 employees will be interviewed. It is expected that the questions will range from why an organisation chose a particular product to whether they would migrate to another supplier if the Oracle-PeopleSoft deal goes through. Legal experts say it is not unusual for customers of merger candidates to be questioned during antitrust reviews.
