It appears increasingly unlikely that Oracle will succeed in its hostile takeover of PeopleSoft, even if it gets the green light from government regulators in the U.S. and Europe.
Thats because it is now highly doubtful that Oracle will be able to persuade anywhere near a majority of stockholders to toss out the current PeopleSoft board of directors in favor of Oracles nominees.
One sign that PeopleSoft senior managers are confident that the company will fend off the hostile takeover is that it has pushed up the annual meeting to March 25 from its usual date in May. This move makes sense if management believes shareholders will reject the Oracle bid because an early vote means the company can get the Oracle monkey off its back that much sooner.
The move also means PeopleSoft is not counting on the Justice Department to come to its rescue by blocking the buyout on the grounds that it would illegally curtail competition in the software industry. The Justice Department has indicated that it should be ready to report its decision sometime this or next month.
Another factor is that PeopleSoft common stock has been hovering between $21 and $22 per share, well above Oracles $19.50-per-share bid for the company. As a result, Oracle has been forced to increase its bid to $26 per share, showing that it is prepared to spend whatever it takes to win over shareholders.
While Oracle can certainly afford to offer this higher price for the stock, it still may not be enough to win over shareholders if they place an even higher value on PeopleSoft as an independent company. They dont necessarily need to look to Oracle to gain a premium on their PeopleSoft investment. However, the market has shown time and again that if the offer is high enough, investors will trade away independence for a fat profit.