PeopleSoft defends poison pills

David Duffield, PeopleSoft founder and acting-CEO, said the firm might have considered the Oracle takeover bid more seriously if terms had been different. Testifying in a Delaware court, he said that the bid offer might have been accepted if some terms had been dropped - and if Oracle had been serious about selling and supporting PeopleSoft products. Duffield took the reins as CEO after the departure of Craig Conway, who was implacably opposed to the deal.

Oracle has applied to the Delaware Chancery Court to overturn PeopleSoft's poison pill anti-takeover arrangement.

PeopleSoft did not ask its advisers to consider the first two offers of $16 and $19.50 per share. It did look at the third offer of $26 a share but decided it undervalued the company. Oracle has since reduced its offer to $21 a share, valuing the firm at $7.7bn.

PeopleSoft yesterday extended the deadline for its customer rebate program until the end of the year. The "Customer Assurance Program" allows customers to claim between two and five times the amount they spent on software if the firm is taken over by Oracle. The court heard from Oracle that this had created a potential liability of $2bn.

PeopleSoft executives gave evidence that the measures were needed to reassure customers. They admitted that some prospective sales had been scared off by news of the takeover bid and fears that their software would not be supported and developed in the long-term.

Oracle co-president Safra Catz told the Delaware Chancery Court that the "financial condition" of PeopleSoft has fallen by between 25 and 33 per cent. She did not say what impact this would have on a possible Oracle bid. A 25 per cent cut would value PeopleSoft at around $5bn.

More detail at CNET. ®

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