Did Oracle just blink first?

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Reports are circulating in the US that Oracle may pull out of its hostile $7.3 billion bid for PeopleSoft if the target company continues its rebate offer to customers.

Oracle is fighting in Delaware Chancery Court to issue an injunction to stop PeopleSoft's "Customer Assurance Program" that promises customers a rebate on licence fees in the event of PeopleSoft being taken over.

A PeopleSoft filing with the Securities and Exchange Commission earlier this month revealed that that the company has upgraded the assurance program to provide refunds of between two and five times license fees. That could mean doling out rebates up to $800 million.

In its motion, Oracle said, "Indeed, if the PeopleSoft board is permitted to continue to issue self-serving, entrenchment-motivated contracts under the revised money-back offer, Oracle may be forced to abandon its bid, as it will no longer be economically reasonable."

Some market commentators have suggested that Oracle is looking for a face-saving exit from the takeover bid, suggesting that anti-trust reviews by both the US Justice Department and the European Union might provide justification.

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