PeopleSoft Board Rejects Oracle Takeover Bid, Despite Shareholder Support

PeopleSoft Inc.'s board of directors said it rejected Oracle Corp.'s $9.2 billion takeover bid Saturday, continuing its staunch resistance a day after the company's own shareholders tendered more than 60 percent of stock to Oracle.

The board unanimously concluded that Oracle's latest $24-per-share bid is inadequate, the company said in a statement posted on its Web site Saturday. It marked the sixth time the Pleasanton-based business software company snubbed its bitter rival since the takeover battle nearly a year and a half ago.

``The board reiterated that it will not sell the company for less than it is really worth and that the company's business plan creates superior value for stockholders,'' PeopleSoft said.

On Friday, PeopleSoft's shareholders tendered 61 percent of the company's stock in support of Oracle's bid. Oracle had threatened to drop its $24-per-share offer if it didn't receive an endorsement from most PeopleSoft stockholders -- a threat that prompted 228.7 million shares to tender, according to a preliminary tally released late Friday.

Bolstered by the investor vote of confidence, Redwood Shores-based Oracle called upon PeopleSoft to surrender, sending a letter to PeopleSoft's board requesting a meeting as soon as possible and extending its offer until Dec. 31.

But PeopleSoft decided to fend off Oracle, saying ``numerous conversations we have had with our largest stockholders over the past 10 days'' led the board to believe that a majority of stockholders don't think the offer reflects the company's real value.

``This majority is comprised of stockholders who did not tender their shares, as well as stockholders who tendered but told us that they believe PeopleSoft is worth more than $24 per share,'' George ``Skip'' Battle, lead director on PeopleSoft's transaction committee, said in the statement.

PeopleSoft's board previously has indicated it will continue to thwart a takeover by triggering a legal defense -- called a ``poison pill'' -- that would flood the market with new shares to make a buyout prohibitively expensive.

Oracle intends to ask a Delaware judge to remove the poison pill in a court hearing scheduled for Wednesday.

Based on legal precedent, analysts believe it's unlikely Judge Leo Strine will touch the poison pill, setting the stage for a climactic showdown at PeopleSoft's annual meeting next spring. If the battle continues that long, Oracle would have to try to wrest control of PeopleSoft's seven-member board by gaining shareholder support for four directors in favor of the takeover.

PeopleSoft's existing board believes it can persuade shareholders to oppose a takeover by delivering on ambitious financial projections released this month.