PeopleSoft battle enters last lap

Shareholders split on what to do

By John Oates, 17th November 2004

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The battle for the heart and soul of PeopleSoft is going down to the wire, with major shareholders split as to what the company should do. Oracle has offered $24 per share for the firm - but its offer expires on Friday.

An ever-growing percentage of the firm is being bought up by short-term investors looking to cash in on a quick sale. They are interested in the difference between what they paid for shares and the $24 a share being offered by Oracle.

Heather Bellini, at UBS Securities, told Bloomberg that as much as 30 per cent of PeopleSoft shares will be held by such arbitrageurs by the end of the week when the offer expires. Paulson and Co, one of the ten largest PeopleSoft shareholders says it will tender, or offer for sale, its 9.1m shares. With arbitragers likely to back the bid it will take only a couple of large institutional investors to tip the balance in favour of Larry Ellison's takeover.

But the battle isn't over yet. One of PeopleSoft's largest shareholders, Capital Management LP, which holds 9.3 per cent of the firm is not supporting the takeover, believing it under-values the firm.

But Capital Guardian Trust, which owns about ten per cent of the firm, said it will offer its stake for sale.

Oracle has said it will abandon the bid if it is not supported by more than half the shareholders. The database giant said it was already talking to other firms about possible acquisitions.

A group of PeopleSoft shareholders is taking legal action to force the firm to remove poison pill policies put in place to stop the Oracle takeover. The group is also asking the Delaware court to force PeopleSoft to discuss the merger with Oracle. ®