M&A

Are PeopleSoft and Oracle Ready to Deal?

PeopleSoft's board might be more receptive to an Oracle takeover if the price were right and there were a ''high certainty'' that it could close qu...
Stephen TaubOctober 6, 2004

Following the departure of PeopleSoft Inc. chief executive officer Craig Conway, the software company may be looking with fresh interest at longtime suitor Oracle Corp.

On Tuesday, during a second day of court testimony, PeopleSoft director Steven Goldby said his company’s board might be more receptive to a deal if the price were right and there were a “high certainty” that it could close quickly, according to the Associated Press.

The two companies are facing each other in Delaware Chancery Court, where Oracle has hoped to wear down PeopleSoft’s takeover defenses. Those measures include a poison pill and a “customer assurance plan” that would require large payments if a successful suitor failed to support the company’s software after an acquisition. That defense alone could add $2 billion to the cost of a takeover, according to the Financial Times.

As recently as last Friday, PeopleSoft had seemed unwilling to budge — even as it dismissed Conway, an adamant opponent of an Oracle takeover. In that announcement, PeopleSoft noted that all of the company’s decisions regarding Oracle’s offer had been made been made with the unanimous recommendation of the company’s transaction committee. On Monday, Goldby added a little extra juice when he testified that “there were then, and there are now, people who believe that Oracle did not intend to acquire PeopleSoft, that its objective was to damage the business,” reported the FT.

Then on Tuesday, as Goldby hinted at a change of heart, Prudential Equity Group analyst Brent Thill told clients in a note that “the new PeopleSoft management team visited the Oracle campus last week,” according to TheStreet.com. “This indicates to us the new PSFT management team is more willing to engage in a dialogue with ORCL to discuss its options.”

PeopleSoft spokesman Steve Swasey told the website, “It’s not true. The management team did not meet with Oracle.” When asked if the board’s transaction team met with Oracle, Swasey would only say, “That’s speculation, and we won’t comment on it,” according to the report.

In a revised note, Thill softened his claims but “left open the possibility that some of PeopleSoft’s independent directors may have met with Oracle,” reported the AP.