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It may be hard to believe, but it appears that Oracle may be ready to toss in the towel on its marathon effort to buy out PeopleSoft.
The final hurdle looks to be the lack of acceptance of Oracles offer by PeopleSofts shareholders.
According to an Associated Press report, Oracle will abandon its legal challenge to PeopleSofts “poison pill” shareholder-rights provisions—and to a money-back guarantee for customers—if shareholders dont tender a majority of the outstanding shares for what Oracle has called its “best and final offer.” This info was contained in a letter sent to Delawares Court of Chancery late last week by an Oracle attorney.
The court heard testimony in the case last month and scheduled a hearing for Friday to review any final issues before the court renders its decision.
The letter is in contrast to the belligerent tone Oracle took earlier this month, when it said it would “look to the Delaware Chancery court to take appropriate action” to remove PeopleSofts anti-takeover measures if Oracle received tender offers for a majority of the shares.
Oracle is asking Chancery Court Vice Chancellor Leo Strine to postpone the Friday hearing until after Oracle learns whether more than 50 percent of PeopleSoft shareholders will accept what it has repeatedly called its last, best offer of $24 a share. The offer is scheduled to expire Nov. 19. Oracle announced the increase from its earlier $21 per share on Nov. 1.
But that doesnt mean Oracle has permanently cured itself of its longing to acquire PeopleSoft. Instead, it appears that Oracles latest maneuver could leave the door open for a renewed buyout bid at some later date if PeopleSoft flounders in the market and its stock price tanks to perhaps make shareholders more willing to accept the deal.
It doesnt make much sense for Oracle to keep pressing for a decision in the lawsuit if a majority of shareholders wont accept even a final, sweetened offer. It could very well be that Oracle doesnt see PeopleSoft shareholders flocking to accept its final offer.
Next Page: Shareholders last chance?
Shareholders Last Chance
?”> In that case, this latest move is aimed at impressing shareholders that this could very well be their last chance to tender their shares. They shouldnt stay on the sidelines waiting for the resolution of legal issues before deciding to accept the offer. Its time to put up or shut up.
Thats because the court is clearly looking for a sign that a majority of shareholders is truly willing to accept the buyout offer.
If Oracle gets offers for a majority or perhaps even a large percentage of the outstanding shares, the company can argue—and the court could find—that PeopleSoft anti-buyout measures are an unfair attempt to thwart shareholders will.
But if Oracle fails to win commitments from significantly more shareholders than from previous offers, then it makes sense to withdraw its offer and abandon the lawsuit rather than wait for the court to rule that the anti-takeover measures are legal.
That would make it even more difficult to persuade the court to invalidate the protections if Oracle decided to make another buyout bid later. Abandoning the lawsuit leaves it open to a renewed buyout attempt if PeopleSoft struggles to make money during 2005.
Of course, there is another possibility: that Oracle has actually concluded that it just cant prevail in this takeover and its time to cut its losses, walk away and turn its attention to other business prospects. Despite the evidence, its still hard to believe, considering the tenacity with which it has pursued PeopleSoft. But Oracle has no choice if it can neither get shareholders to throw themselves into its arms nor persuade the court to remove the anti-takeover protections.
Perhaps Oracle has decided it has sufficiently delayed and hampered PeopleSoft business plans for as long as it possibly can.
In any event, it would be a welcome development for PeopleSoft and the ERP (enterprise resource planning) market if this hostile takeover is put to rest–finally and, with luck, permanently–by the end of the month.