Enterprise software company urges shareholders to reject a $16 per share takeover offer.
PeopleSoft Inc.s board of directors Thursday announced that it is recommending that stockholders reject Oracle Corp.s hostile takeover bid.
At the same time, financial analysts are frowning on Oracles attempt to gobble up PeopleSoft, with Moodys Investors Services changing its ratings outlook for the database giant to negative.
Oracle, of Redwood Shores, Calif., late last week offered PeopleSoft stockholders $16 per share, or about $5 billion, to buy its enterprise software rival
. The move came days after PeopleSoft itself had announced a $1.7 billion deal to acquire a third enterprise software vendor, J.D. Edwards & Co.
PeopleSoft officials, in Pleasanton, Calif., said the board believes that Oracles offer would be tied up for a long time by U.S. and European government antitrust investigations, and that regulators were likely to block the deal on grounds that it would unfairly limit competition.
"The unsolicited and hostile nature of the offer, combined with Oracles statements, is designed to disrupt [PeopleSofts] strong momentum at significant cost to PeopleSofts customers. As a result, after careful consideration the Board, including a committee of independent directors, unanimously recommends that PeopleSoft stockholders reject the offer and not tender their shares to Oracle," a statement from PeopleSoft said.
The board also said the $16 per share offer undervalued the company.
"Oracles offer seeks to enrich Oracle at the expense of PeopleSofts stockholders, customers and employees," said PeopleSoft President and CEO Craig Conway, in a statement.