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Oracle must wait for poison pill decision

Judge wants to hear more evidence

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Oracle's proposed takeover of Peoplesoft has hit another barrier. A Delaware judge has delayed his final ruling over Peoplesoft's poison pill defence, saying that he needs to hear more evidence.

Judge Leo Strine said he wanted to hear why the Peoplesoft board had rejected Oracle's most recent bid of $24 per share. Peoplesoft's shareholders have voted to accept the bid, but the board rejected it. It says it will not sell the company for less than it is worth, and that the current bid undervalues the company.

In its defence against Oracle's hostile takeover bid, Peoplesoft promised to give its customers rebates worth between two and five times their licensing fees, in the event of a takeover. The deal, which represents a liability of at least $800m, would begin if the company is bought in the next two years, and if support for product lines is reduced within four years.

Oracle wants the court to overturn the measures. In its suit, it claims that the measures are unlawful because then-CEO Craig Conway misled investors.

The Delaware court is thought unlikely to overturn the Peoplesoft board. Which leaves Oracle with the much more time-consuming and expensive option of a proxy battle to gain seats on the board. Yesterday, Oracle announced that will nominate four candidates for election to Peoplesoft's Board of Directors. That vote will take place at PeopleSoft's 2005 annual stockholders meeting.

Jeff Henley, Oracle's Chairman of the Board said: "We believe that the current board of PeopleSoft is not acting in the best interests of stockholders and that a large majority of those stockholders are in favor of a change."

Judge Strine has pencilled the hearing in for 13 or 14 December, but declined to say when he would make his final ruling. ®

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