PeopleSoft Inc.s board of directors on Friday unanimously rejected Oracle Corp.s revised bid of $19.50 per share.
The board reiterated its previously expressed concern that the offer is not in stockholders best interest, saying in a statement that the proposed takeover would face "substantial regulatory delays and a significant likelihood that the transaction would be prohibited."
Those delays and uncertainties, the statement asserted, combined with Oracles "stated intentions to discontinue PeopleSofts products," would cause PeopleSofts business to suffer "irreparable damage," the board said in the statement.
The board went on to say that the revised offer still undervalues the company, as it said of the original offering price of $16 per share. Although PeopleSoft stock was trading at $17.61 as of Friday morning, the board said it based its assessment of Oracles current bid as being undervalued on PeopleSofts current financial performance and on its future earning potential, including the value it will reap through its planned acquisition of J.D. Edwards & Co. Oracles offer also imperils PeopleSoft because it could be withdrawn at any time, according to the board.
"Oracles offer undervalues the company and is not in the best interest of PeopleSoft stockholders," said PeopleSoft President and CEO Craig Conway, in the statement. "It is highly conditional, faces significant regulatory delays and uncertainty, and threatens serious damage to our business."
Conway vowed to continue to pursue the merger with J.D. Edwards. "PeopleSoft is committed to the J.D. Edwards acquisition," Conway said. "We believe that the continued execution of our strategy will create significantly higher stockholder value."
Oracle responded, as it has in the past, by calling PeopleSofts board self-interested. "Once again, PeopleSofts board has put managements interests first, ignoring the mounting demands of its shareholders to redeem the poison pill and meet with Oracle," said Jim Finn, an Oracle spokesman.
The board of J.D. Edwards has amended its severance policy to keep President and CEO Robert Dutkowsky on board for six months after any completed merger, the company said in a regulatory filing on Thursday.
Dutkowsky is due to receive $650,000 on the closing of the merger with PeopleSoft and $1.95 million at the end of the six-month transition period. Contrary to news reports that have stated that this sum was an amendment, the figure is nothing new and has been in effect since Dutkowsky joined the company in 2002, according to Victor Chayet, director of corporate communications for the Denver company.
According to Chayet, no executives received sweetened deals in the amended severance policy and, in fact, some will lose health insurance benefits.
(Editors Note: This story has been updated since its original posting to include information on Robert Dutkowsky.)