PeopleSoft Inc.'s board of directors Thursday unanimously rejected a US$5.1 billion offer by Oracle Corp. to buy the company and urged shareholders not to accept the unsolicited buyout bid.
In sharp language, board members at the Pleasanton, Calif., company said in a statement that they believe "the offer would undoubtedly face lengthy antitrust scrutiny, with a significant likelihood that approval would not be granted."
"The Board believes that the delays and uncertainties created by Oracle's offer, coupled with Oracle's stated intent to discontinue PeopleSoft's market-leading products, represent a substantial threat to stockholder value," the company said in the statement, which was posted on its Web site. "The unsolicited and hostile nature of the offer, combined with Oracle's statements, is designed to disrupt the Company's strong momentum at significant cost to PeopleSoft's customers."
PeopleSoft President and CEO Craig Conway said in the statement that the purchase, if allowed to take place, would harm competition in the enterprise software market.
"Oracle's offer seeks to enrich Oracle at the expense of PeopleSoft's stockholders, customers and employees," Conway said. "We believe that Oracle's proposed acquisition of PeopleSoft would stifle competition and limit customer choice. PeopleSoft remains steadfastly focused on providing our customers with superior products and services, and we will not let Oracle's tactics interfere with our business."
Specifically, the board said it made its decision based on three major considerations:
-- Oracle's offer raises "significant" antitrust issues in the U.S. and Europe.
-- A prolonged regulatory approval process, along with Oracle's plans to discontinue PeopleSoft's products, "creates uncertainty for PeopleSoft's customers, hindering the Company's momentum and negatively impacting the Company's financial performance."
-- The offer undervalues PeopleSoft based on its financial performance, products and future plans.
The company also reiterated its interest in buying J.D. Edwards & Co., a move that was announced just five days before Oracle announced last Friday that it would offer $16 per share for PeopleSoft. That deal is valued at about US$1.7 billion.
"...The Board reaffirmed its strong commitment to PeopleSoft's acquisition of J.D. Edwards," the company said in its statement. "The PeopleSoft and J.D. Edwards combination will provide enhanced value for stockholders and significantly accelerate PeopleSoft's competitive position through the addition of J.D. Edwards' complementary suite of products and services. ..."
The company said in a statement yesterday that it had officially filed "premerger" notification documents with the U.S. Department of Justice and the Federal Trade Commission regarding its plans for J.D. Edwards.