Heading back to court
."> Next, Oracle sued in Delaware Chancery Court, seeking to expunge a "poison pill" shareholder rights provision that would flood the market with millions of new shares if Oracle acquired a substantial percentage of PeopleSoft shares. Early this month, Oracle raised its bid for PeopleSoft shares from $21 to $24, saying this was its "best and final offer." This was sufficient inducement for 61 percent of PeopleSoft shareholders to tender their shares to Oracle, which immediately called for PeopleSoft to bow to shareholders will and promptly negotiate a definitive merger agreement.Oracle could finally prevail in that proxy vote if the majority that accepted its $24 offer shows up to vote for a slate of directors that would favor the buyout. Shareholders rejected Oracles slate of directors in at the 2004 annual meeting. Oracle has put forward its slate of directors. Click here to read more. PeopleSoft also plans to go to trial in January with its lawsuit claiming that Oracle is engaging in unfair business practices by using the buyout effort to disrupt its business. Computer Associates added to the legal drama in 2004 with a series of executive firings and federal indictments that led to the ouster and eventual departure of former CEO Sanjay Kumar from the company. Kumar, long responsible for formulating CA product and technology strategy, had long been former CA Chairman Charles Wangs right-hand man. Kumar succeeded Wang when he retired. However, an investigation by the CA board of directors and federal investigators found accounting that the company had been booking revenue from sales contracts that hadnt been signed and sealed to inflate its revenue and profit columns. First, CA forced Kumar to step down as CAs chairman and CEO. However, the company retained him for a time as chief software architect. But he left the company altogether as the investigation showed that he shared responsibility for the premature booking that required the company to write off more than $2 billion in revenue claimed in 2000 and 2001. In September, the Justice Department indicted Kumar, and CA struck a deferred prosecution deal with the government in which it will establish a $225 million restitution fund for current and former shareholders. It also agreed to try to recover bonus and stock compensation from former CA officers and employees who participated in the accounting fraud. CA made a major step toward a recovery from these troubles as new reports indicated that the company would name John Swainson, vice president of worldwide software sales at IBM, as its next CEO. He would replace interim CEO Ken Cron, who stepped in to replace Kumar. The settlement and CEO hiring offers hope that CA will be able to but these legal problems behind it in 2005 and focus on completing the business restructuring that Kumar pursued over the past three years. Check out eWEEK.coms for the latest news, reviews and analysis about productivity and business solutions.
But PeopleSoft refused and said it would carry the battle to what could be a climactic proxy vote at its annual meeting in February 2005.