The bitter battle between Oracle Corp. and PeopleSoft Inc. has taken on a new twist. Oracle this morning raised its bid for PeopleSoft by $6.50 a share, or about $9.4 billion.
PeopleSoft, of Pleasanton, Calif., announced positive fourth-quarter earnings last week, to the tune of $685 million—a 34 percent increase over the same quarter last year. With positive earnings, those watching the deal closely felt it was only a matter of time before Oracle raised its bid to acquire its rival.
The latest offer is about an 18 percent premium over PeopleSofts closing price of $21.89 at the close of market Tuesday, according to Oracle officials.
The raised bid for PeopleSoft represents another twist in the deal. PeopleSofts board of directors have twice rejected Oracles bid on the grounds that it undervalues the company.
Oracle, on the other hand, has continuously pointed to PeopleSofts declining earnings as eroding shareholder value.
Todays increased bid points to a recapitulation of sorts—one downplayed by Oracle.
Jeff Henley, Oracles chairman and interim chief financial officer—Oracle is searching for a new CFO as Henley has recently been appointed to the board—said in a statement, "Given PeopleSofts current prospects, including its recent downward revisions to earnings guidance for the first quarter, we believe our offer presents a compelling value to PeopleSofts stockholders."
Oracle officials said this is the companys final offer.
"We urge PeopleSofts directors to seriously consider our offer," said Henley.
Oracle is also waging a proxy battle to win over PeopleSoft. Late last month the company announced a slate of nominees for PeopleSofts board of directors. Last Friday, PeopleSoft nominated four of its eight sitting board members for re-election, and set the date for the annual shareholders meeting for March 25. Shareholders can vote for new board members as early as Feb. 10.
Oracle is also hoping to increase PeopleSofts board from eight members to nine.
Both companies have suits pending against the other. PeopleSofts claim, filed in Alameda County, Calif., seeks injunctive relief from Oracles hostile takeover bid.
Oracles suit, filed in Delaware, seeks injunctive relief from PeopleSofts poison pill anti-takeover measure, and to have PeopleSofts controversial Customer Assurance Program rescinded. That program looks to refund PeopleSoft customers between two and five times their license fees in the event of a takeover.
Both cases are in the deposition phase.
At the same time, the U.S. Department of Justice, the European Commission and more than half the states attorneys general are investigating the possible anti-competitive nature of the proposed deal.
All three investigations are pending.
Oracles tender offer, extended three times since the initial offer in June, expires March 12.