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PeopleSoft threatens to sue Oracle

Oracle threatens to buy PeopleSoft

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PeopleSoft and Oracle are letting the venom gush, as their long-standing battle approaches a possible end this week.

Both companies have fired off last-minute statements, hoping to push investors to their respective sides. Oracle is looking for at least half of PeopleSoft's shares to be tendered in favor of its $24 bid for PeopleSoft by Friday or the database maker will back off its acquisition attempt. Should the majority side with Oracle, the company will then take PeopleSoft to court to try and remove provisions such as a poison pill that seek to block Oracle from acquiring the software maker.

PeopleSoft today issued a not-so public note to Oracle's CEO Larrry Ellison, threatening legal action against Oracle.

"I recently learned that Oracle and its representatives are circulating to the media a chart detailing "my" sales of PeopleSoft stock in late 2003 and suggesting that there is a great story there," wrote PeopleSoft CEO Dave Duffield. " As your people well know from my reports filed with the SEC, all but two of the sales on your chart were conducted through my Rule 10b5-1 plan, which, as you know, is a prearranged plan over which I have no discretion that is used to gradually diversify my investment portfolio. I understand that you too have a 10b5-1 program and have been selling millions of Oracle shares this year."

The one non-10b5-1 sale was made by Maddie's Fund - a pet rescue foundation set up by Duffield. The organization makes its own financial decisions, according to PeopleSoft. Think of the animals, Larry!

"If Oracle continues to spread distortions, I will have to consider all appropriate actions, including bringing a claim for defamation," Duffield ends.

Oracle took a more direct approach to win the acquisition war by sending a note to PeopleSoft investors.

"The PeopleSoft board has for 17 months acted to deny stockholders the opportunity to consider our offer," Oracle said. "They have failed to deliver an alternative transaction to deliver value to stockholders, and seem determined to use the poison pill indefinitely to deny stockholder choice. They have responded to our $24.00 best and final offer in characteristic fashion: by attempting to change the subject and issuing what analysts have described as unobtainable financial projections."

With the deal coming down to the wire, some of the largest PeopleSoft shareholders are divided over which side to take. Capital Guardian Trust, for example, has said it will push its shares in favor of Oracle, while Private Capital Management will go with PeopleSoft. Capital Guardian holds 37.4m shares of PeopleSoft, making it the largest institutional investor.

You've got to hope that Oracle wins this round and sends the whole disaster to court. If nothing else, this battle has to be keeping the Silicon Valley lawyers well fed, and the newspapers well stocked. Here's hoping for at least two more years of squabbling. ®

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