Oracle e-Mails Raise Questions About Motive

By Renee Boucher Ferguson  |  Posted 2003-08-27

Oracle e-Mails Raise Questions About Motive

The release of uncensored court documents around Oracle Corp.s hostile bid for PeopleSoft Inc. has raised the mudslinging between the two companies to a near fever pitch.

Citing internal documents and e-mails in a lawsuit trying to block the proposed $7 billion takeover, PeopleSoft claims it can prove Oracles antagonistic attempt to ruin its business—and not necessarily through acquisition.

Oracle, of Redwood Shores, Calif., launched a takeover bid of PeopleSoft, of Pleasanton, Calif., in early June, just days after PeopleSoft announced its intent to acquire J.D. Edwards & Co. As a result, PeopleSoft filed suit in Alameda County, Calif., to stop Oracles actions. It amended the suit Aug. 12, with new evidence—much of it removed from public documents until yesterday, when the information was leaked to a local California newspaper, according to a PeopleSoft spokesman.

At issue is Oracles supposed intent to create uncertainty among PeopleSoft customers, to harm PeopleSofts business by causing the share price to drop and to discontinue support of PeopleSofts software should the takeover prove successful.

"Weve certainly wounded PSFT. ... Even if we dont end up closing the deal, this is going to take PSFT time to recover. ... And, of course, our corporate image of being aggressive, brash, and marching to the tune of a different drummer has been reinforced," read one e-mail from an unidentified Oracle executive, who referred to PeopleSoft by it stock ticker symbol.

Additional internal Oracle documents reveal that Oracle prepared a marketing, sales and public relations program designed to injure PeopleSoft, in the hopes that the companys stock price would fall, making Oracles initial $16-per-share offer look favorable, according to the un-redacted court documents.

"The more something hurts PSFT, the more likely that share price drops and $16 starts to look better," said the unidentified Oracle executive.

Oracle later amended its offer to $19.50 a share, where it stands today.

Next page: Will Oracle support PeopleSoft software?

PeopleSoft Support

What most customers are concerned about, however, is whether or not Oracle would continue support of PeopleSofts software should the takeover prove successful. In the amended suit, PeopleSoft cites a June 6 e-mail from Oracle Executive Vice President and board member Safra Catz that reads, "We really wont be continuing [PeopleSofts] product line."

Oracle is sticking to its story that PeopleSoft is using information out of context.

"The email [from Safra Catz]... is a good example of PeopleSofts attempt to take a single sentence fragment from a lengthy document out of context and try to turn it into something salacious," Oracle spokesman Jim Finn said in a statement.

PeopleSoft is suing for injunctive relief from Oracle, which would include Oracle withdrawing its tender offer and ceasing any written, oral or electronic communications with PeopleSoft customers.

Oracle must surmount other obstacles before its bid is successful. A group of more than two dozen state attorneys general is looking into Oracles takeover offer. Regulator bodies from the United States, Canada and Europe are also examining the deals antitrust implications.

Earlier this month, Oracle Executive Vice President Chuck Phillips told reporters that Oracle expects the U.S. Department of Justices probe to be completed by mid-November.

Oracle next week will hold a second "town meeting" with PeopleSoft customers to discuss how Oracle would support PeopleSoft applications if the merger goes through. Phillips and another executive vice president, Mike Rocha, will answer PeopleSoft customers questions.

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