Oracle asks court to remove PeopleSoft poison pills

Another day, another battle

By John Oates • Get more from this author

Posted in Applications, 4th October 2004 10:56 GMT

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Oracle is back in court this week as its hostile bid for PeopleSoft starts to turn in its favour.

Last week saw the ousting of Craig Conway, PeopleSoft's chief executive who strongly opposed the takeover. PeopleSoft shares rose sharply on the news. More good news came last week from the US Department of Justice - it has decided not to appeal a court ruling that the takeover is not anti-competive. The deal still faces investigation from the European Commission, although the rumour is that Competition Commissioner Mario Monti will approve the takeover before he leaves his post at the end of October.

The PeopleSoft board announced on Friday that Conway was leaving because it was no longer confident in his ability to run the company. David Duffield, founder and chairman, will take charge. Peoplesoft says Conway's departure is unconnected with the Oracle bid.

Oracle had accused Conway of acting improperly for rejecting its takeover offer without giving board directors the chance to consider it.

Oracle is this week asking the Delaware court to remove two "poison pill" arrangements which PeopleSoft has made to try and block the takeover. One of these concerns paying customers compensation for disruption caused by a takeover which could total $2bn. The other relates to shareholder's rights to block a takeover.

The case will be heard by Leo Shrine who in previous cases has defended the rights of outside shareholders. He ruled against Shorewood Packaging when it was the target of a hostile takeover from Chesapeake Corp.

Microsoft boss Steve Ballmer told the FT he was not interested in stepping in to save PeopleSoft from the attentions of Oracle. He said Microsoft considered SAP the most attractive target in the market - and that deal had fallen through: "I know SAP, and they're no SAP." But he refused to entirely rule out a deal, saying "one should never say never." ®