PeopleSoft Inc. announced Wednesday that it settled the dispute with shareholders over its controversial Customer Assurance Program. The program entitled some customers between two and five times their license fees in the event of a takeover by another company that did not support PeopleSoft products for a specified amount of time.
The Customer Assurance Program was put in place last summer as an anti-takeover device to ward off a hostile takeover bid from rival Oracle Corp.
In Wednesdays settlement, the plaintiffs, or stockholders, agreed to release all claims against PeopleSoft as well as those against its board of directors.
Some shareholders believed the CAP program was unfair—that it put a damper on PeopleSofts potential worth—and so filed suit last fall to stop to program. The suit also called into question the actions taken by PeopleSofts board in relation to Oracles offer.
Under a “memorandum of understanding” with shareholders, PeopleSoft agreed to extend the program past June 30 and to limit the consequences of the program to actions by Oracle—in other words, the CAP program wont be called into effect should another company, often referred to as a “white knight,” step in to acquire PeopleSoft and save it from Oracles clutches.
The June 30 date is significant because by that time the antitrust trial between Oracle and the U.S. Department of Justice should be settled.
That case, brought by the Justice Department in February, is scheduled to begin June 7 in a San Francisco district federal court. If the Justice Department is successful in obtaining a federal injunction to block the deal, Oracles bid for PeopleSoft is dead in the water. However, if the Justice Department is unsuccessful, Oracle need only wait a week to pursue its claim for PeopleSoft.
Separately, PeopleSoft announced Wednesday that its board is once again rejecting Oracles latest tender offer—and its urging shareholders to do the same. Oracle last week amended its offer for PeopleSoft for the fourth time, lowering the bid by $5 per share, from a high of $26 down to $21.
“Oracle Lowers Hostile Bid for PeopleSoft.”
The deal is also being closely watched by the European Commission, which recently requested more information from Oracle, of Redwood Shores, Calif., before it weighs in on antitrust issues. Should the EU determine the deal anti-competitive, Oracle would be barred from doing business in Europe should it acquire PeopleSoft, of Pleasanton, Calif. Its unclear when the EU will announce its decision.