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Technology Stocks : PSFT - 1999: The "Make-It-or-Break-It" Year? -- Ignore unavailable to you. Want to Upgrade?

To: SemiBull who wrote (1237)	6/18/2003 8:04:08 PM
From: SemiBull	Read Replies (1) \| Respond to of 1274

Oracle's New Offer May Put Pressure PeopleSoft To Deal Wednesday June 18, 6:15 pm ET By Janet Whitman, Of DOW JONES NEWSWIRES NEW YORK (Dow Jones)--Though tough for PeopleSoft Inc. (NasdaqNM:PSFT - News) 's board to swallow, Oracle Corp.'s sweetened takeover offer may pressure it to dissolve its "poison pill." The so-called poison-pill, one of an array of takeover defenses PeopleSoft has in place, makes it prohibitively expensive for an unwanted suitor to buy a significant stake. The mechanism, also known as a shareholder rights plan, has helped PeopleSoft thwart Oracle's hostile bid. But now that Oracle has raised its all-cash offer to $19.50 a share, or $6.3 billion, up from an initial offer of $16 a share, shareholders may urge PeopleSoft to abandon the takeover defense and negotiate a deal. Oracle announced the 22% higher offer on Wednesday following discussions in recent days with holders of a majority of PeopleSoft shares. "Many of those shareholders indicated the prices at which they would tender their shares," Oracle Chairman and Chief Executive Larry Ellison said in a press release announcing the new offer. PeopleSoft's takeover defenses prevent investors from forcing the company to drop the poison pill. Investors can't, for instance, mount a proxy battle until next year's annual meeting and can't call a special meeting in support of Oracle's bid. "So they may take indirect action," said Meredith Brown, co-chairman of the mergers and acquisitions group at New York law firm Debevoise & Plimpton. If investors think the bid is high enough, "they may tell the board, 'Take it. It's $19.50 and I will be extremely unhappy if you don't take it and the stock price goes down,"' he said. For PeopleSoft's board, however, the deal isn't only about money and value. "PeopleSoft has a different strategic vision that doesn't include Oracle," said Charles Nathan, a veteran New York takeover lawyer at law firm Latham & Watkins. "It's a question of whether Oracle can put enough money on the table to force PeopleSoft to give up its strategic vision. There is some amount of money big enough to do it, but maybe not money Oracle is willing to pay." In an effort to force PeopleSoft to accept its hostile bid, Oracle filed a lawsuit on Wednesday against the company. The suit, which seeks to rescind the poison pill, alleges PeopleSoft's board has breached its fiduciary duties. Legal experts say the suit will be tough to win. A Delaware judge will be "extremely reluctant to tell a board it has to remove a poison pill," said Mort Pierce, an attorney at Dewey Ballantine LLP. The court examines whether directors have made informed decisions, not whether their decisions are wrong or right, he explained. The Delaware courts have forced boards to remove pills in the past, but most cases involved companies that had multiple suitors where the board had preference for one, Pierce said. News of the sweeter offer sent PeopleSoft's stock price to a high of $18.60 a share. The stock closed at $17.93 a share, up 4.5%, on volume of 45.5 million shares, up from average daily volume of 12.4 million shares. The rally signals investors believe Oracle is now serious about buying PeopleSoft. Previously, some investors and industry observers believed the $16 a share offer was simply a ploy to derail PeopleSoft's pending merger with J.D. Edwards & Co. . To get a deal done, however, Oracle may need to raise its bid above $20 a share, said Andrew T. Whittaker, head of arbitrage research at Lehman Brothers. PeopleSoft is trading below Oracle's new $19.50 a share offer. Rather than a sign that investors think the bid is adequate, however, the discount may reflect investor jitters about potential antitrust hurdles facing the deal. "It's not dead on arrival, but it would require a series of fixes to make it competitively neutral," said Whittaker. -By Janet Whitman, Dow Jones Newswires; 201-938-5248; janet.whitman@dowjones.com (Marcelo Prince contributed to this report.)