If anyone still thinks Larry Ellison is only mischief making by mounting a hostile takeover of PeopleSoft, the Oracle CEO has taken action to convince them otherwise, by bumping up his offer price by $1.2 billion.
The higher bid comes two days after Oracle met with major PeopleSoft investors in Boston and found that they were not happy with the original $16 a share bid. That offer has now been raised to $19.50, which Ellison indicated was in the price range that the shareholders indicated would be appropriate.
"Many of those shareholders indicated the prices at which they would tender their shares. Therefore, Oracle is raising its all-cash offer to $19.50 per share," he said. "Oracle remains committed to acquiring PeopleSoft and will not be deterred by management's maneuvers to maintain control of a company they do not own. Contrary to what PeopleSoft management would have you believe, Oracle intends to fully support PeopleSoft customers and products for many years to come. Satisfying those customers is the key to the success of this acquisition."
Ellison's view was repeated by Oracle chief financial officer Jeff Henley. ``Through these meetings, we've received a broad range of feedback from investors who control the majority of PeopleSoft shares,'' said Henley.``We listened closely to the shareholders.''
Analysts took Oracle's raising of the bid price as clear signal that this is a serious play. "Raising its bid...puts Oracle much closer to a deal PeopleSoft’s stockholders may be willing to accept," said Randy Weston of AMR Research. "The majority of PeopleSoft stock is in the hands of institutional investors with whom Oracle has met and who have indicated that this price is much more attractive."
Weston reckons that Oracle's chances of success are getting stronger. "If Oracle does indeed have institutional investors on board, there isn’t a lot short of court order that could stop this deal," he said.
For its part, PeopleSoft has taken actions to improve the chances of success for its own planned takeover of JD Edwards by raising its offer to $1.75 billion and raising the amount of hard cash it would pay, eliminating the need for a PeopleSoft shareholder vote on the acquisition in the process.
This has caused Oracle to become the latest in the triangle to mount legal action, alleging that the PeopleSoft moves are intended to shareholders from voting on Oracle's offer and that PeopleSoft board members are breaching their fiduciary duties by failing to act in the best interest of PeopleSoft shareholders. Oracle seeks to nullify PeopleSoft's offer for JD Edwards and to cancel PeopleSoft's "poison pill" provision which prevent a hostile bid.
Earlier Ellison had reiterated his determination to see through the takeover. "We are determined to complete this acquisition," he said. "Now we are just talking about price. [PeopleSoft chief executive Craig] Conway said he couldn't imagine a price where he would sell. His shareholders have better imaginations than he does . They are saying they want more money. We understand that. We are talking."
Ellison dismissed antitrust concerns raised by PeopleSoft regarding Oracle's takeover, arguing that customers would benefit from having bigger, stronger competitors to take on SAP and Microsoft in the applications market. "There is no antitrust concern," he insisted, arguing that the market was not dominated by any one company. "The largest player in the market has 17 or 18 per cent.”
He also added that despite widespread speculation that his first action as PeopleSoft’s new owner would be to can the planned JD Edwards merger, he was in fact in favour of it. "I would love to have both PeopleSoft and JD Edwards," he said.