Two of PeopleSoft Inc.s biggest shareholders arent waiting for Oracle Corp.s Friday deadline to act on the latter companys "best and final" $24-per-share tender offer in its quest to acquire PeopleSoft.
And their decisions to tender are split.
Capital Guardian Trust Co., which owns about 10 percent of PeopleSofts outstanding shares, has said it will tender its 37 million shares to Oracle this week, according to a statement released by Oracle.
Countering that, Private Capital Management LP, which owns just over 9 percent of PeopleSoft shares, said in a Securities and Exchange Commission filing today that it will not tender its 35 million shares to Oracle because it believes the deal undervalues PeopleSoft.
Oracle raised its hostile tender offer for PeopleSoft on Nov. 1 from $21 per share to $24, calling this its final offer. The company has raised and lowered its bid five times over the past 18 months in its battle to acquire PeopleSoft. Oracle warned with this last offer, however, that if at least 50 percent of PeopleSoft shareholders do not tender their shares by midnight on Friday, Nov. 19, it will withdraw the offer.
With institutional investors such as Atlanta-based Capital Guardian and Private Capital Management being the majority institutional stake holders in PeopleSoft, investors are watching their moves closely—as are the boards of PeopleSoft and Oracle.
PeopleSofts board has maintained from the outset of the unwanted takeover attempt that Oracles offer undervalues the company. In a road show this week with shareholders, PeopleSoft is continuing that train of thought, working to prove that the company is in a better position now than when Oracle made its high offer of $26 per share last February.
Naples, Fla.-based Private Capital Management is siding with PeopleSoft.
"PCM has significant concerns as to whether the Revised Offer fully reflects the value PeopleSoft shareholders may realize over the intermediate term from PeopleSofts continued operation as an independent company," the company wrote in its SEC filing.
Oracle, too, is on the road hoping to woo investors, taking the tack that PeopleSoft will simply not survive as an independent company. In acquiring PeopleSoft, Oracle is hoping to revive its flagging applications business, which saw a 36 percent decline in license revenues in its first quarter of 2004.
PeopleSofts board warned last week during a call with analysts and press that even if Oracle obtains 50 percent of the companys shares—which the board expects to happen—it will not yet own the company. Oracle still needs to clear PeopleSofts poison pill anti-takeover measure to acquire the company.
A Delaware Chancery Court judge is currently weighing whether or not to allow PeopleSofts poison pill and Customer Assurance Program—Oracle brought suit against PeopleSoft to have both removed—as both measures would make the deal prohibitively expensive for Oracle. The CAP would refund to some PeopleSoft customers between two and five times their license fees in the event of an Oracle takeover; the poison pill would flood the market with PeopleSoft shares in the event of a takeover.
The court is expected to rule on Oracles case next month, or early in 2005, officials said.
Should Oracle prove successful in acquiring half of PeopleSofts shares by Friday, but lose the Delaware case, its expected the company will wage a proxy battle in the spring to take over PeopleSofts board.