Citing advice from Goldman, Sachs and Co. and Citigroup Global Markets Inc., PeopleSoft Inc.s board of directors urged shareholders this morning to reject Oracle Corp.s latest tender offer.
PeopleSoft announced today that its board voted unanimously to reject Oracles third bid to acquire the company. Last Wednesday Oracle, of Redwood Shores, Calif., announced that it would pay PeopleSoft shareholders $26 per share for their common stock. The offer had been revised from the companys longstanding offer of $19.50.
Oracle launched its initial hostile takeover bid for PeopleSoft last June, offering $16 per share—well below PeopleSofts average trading price in the low $20 range. Oracles initial offer followed closely on the heels of PeopleSofts announced intent to acquire e-business applications software developer J.D. Edwards & Co., a purchase that was completed in near record time later that summer.
On June 18 Oracle increased its bid to $19.50 per share.
PeopleSofts board said in a statement released this morning that based on "fundamental valuation measures" it concluded Oracles offer is again undervaluing the companys overall value—particularly in light of its ongoing efforts to integrate J.D. Edwards.
The board recommended that PeopleSoft shareholders not tender their shares to Oracle—advice thats been heeded to date. About 10 million of PeopleSofts 361 million shares have been tendered to Oracle as of Feb. 4, according to Oracle officials.
In making its latest recommendation to shareholders, PeopleSofts board concluded that Oracles revised offer is inadequate "from a financial point of view," according to the statement.
"Given PeopleSofts uncertain future as a stand-alone company and the fact that, for the first quarter, PeopleSoft guided analysts below the consensus estimates, Oracle believes that its offer is full and generous," said Jim Finn, an Oracle spokesman.
"Since PeopleSofts current directors persist in their refusal even to discuss the offer with Oracle, PeopleSoft stockholders can act in their own best interests by tendering their shares and voting to elect the slate of five independent directors to the PeopleSoft board."