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Oracle Sends PeopleSoft an Ultimatum

Oracle Sends PeopleSoft an Ultimatum

Oracle this morning raised its price for PeopleSoft from $21 a share to $24, a total of $8.8 billion - as it was widely expected to do despite its intimations that it would drop the price again - and has given PeopleSoft shareholders until midnight on Friday, November 19 to tender a majority of the shares. Otherwise, it says, it'll abandon its pursuit of the company, an adventure it's been on for close to 17 months.

Oracle called the raised price its "best and final offer" and claimed that since the Justice Department has decided not to appeal the federal court decision slamming its attempt to block the acquisition and since the European Commission has no objections to the takeover the PeopleSoft board is "the only obstacle," adding that it reckons its offer is "far preferable to PeopleSoft's uncertain future as an independent company."

In a letter to PeopleSoft's board yesterday, Oracle CEO Larry Ellison and chairman Jeff Henley said that if PeopleSoft stockholders tendered a majority of the shares by the November 19 deadline and the PeopleSoft board hadn't removed the company's poison pill and other takeover defenses Oracle "will look to the Delaware Chancery Court to take appropriate action."

PeopleSoft issued a statement this morning saying its board would think about it but gave no indication when it might have a reply.

The PeopleSoft board has never met with Oracle and the only time the two sides ever dickered was in Chancery Court the week before last when Oracle was trying to knock down PeopleSoft's poison pill and novel customer rebate defenses.

Wall Street isn't quite sure whether to take Oracle at its word that this is its last offer and, showing its indecision, only bid PeopleSoft's stock up this morning up two bucks and change to close to $23.

Without an Oracle takeover, it is believed PeopleSoft shares will collapse to somewhere in the mid to high teens. Oracle says 24 bucks represents a 60% premium to where PeopleSoft was trading when Oracle made its first run at the company a year ago June.

This is the fifth time Oracle has changed its bid. It started at $16, went to $19.50, then to $26, then dropped it to $21. If PeopleSoft had moved at Oracle's high, the company would have gone for $9.4 billion cash.

In their letter yesterday Ellison and Henley said they would still prefer to negotiate a merger agreement. They claimed that although the $24 price was "non-negotiable," they are "ready to negotiate the other terms" and could send over a "draft merger agreement promptly."

For the sake of PeopleSoft's skittish users, who remember Ellison saying he was going to trash PeopleSoft's software when he got his hands on the company, a chastened Oracle claimed it was "committed to supporting PeopleSoft's customers and products" and that it intended to "develop and introduce a next generation of PeopleSoft products - PeopleSoft 9" and "maintain an engineering organization at the Pleasanton campus."

More Stories By Maureen O'Gara

Maureen O'Gara the most read technology reporter for the past 20 years, is the Cloud Computing and Virtualization News Desk editor of SYS-CON Media. She is the publisher of famous "Billygrams" and the editor-in-chief of "Client/Server News" for more than a decade. One of the most respected technology reporters in the business, Maureen can be reached by email at maureen(at)sys-con.com or paperboy(at)g2news.com, and by phone at 516 759-7025. Twitter: @MaureenOGara

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