Oracle to Fight DOJ Decision on PeopleSoft Merger

The PeopleSoft board has steadfastly rebuffed Oracle's overtures, saying Oracle's price was too low each of the three times the company raised its bid. PeopleSoft executives also have said its company is more valuable on its own, and cited a slow antitrust review as a reason to oppose Oracle's move.

Investors, meanwhile, started taking Oracle more seriously after its last move sweetening its bid to $26 a share, a premium over its current trading price. Shagrin called the latest price a "compelling offer" for PeopleSoft shareholders. "I thought the $26 price was a pretty fair price," he said. But "it doesn't look like we're going to get a chance to see if that price would have been enough to get that deal done."

In explaining his downgrade to sell, Merrill Lynch analyst Jason Maynard wrote that while the DOJ's decision was not surprising and that the deal might be revived given Oracle's legal challenge, PeopleSoft shares "no longer have a floor, and the stock has material downside given our execution concerns."

These concerns include skepticism about the predicted "revenue synergies" from the J.D. Edwards merger and a belief the "PeopleSoft 8 product cycle has been played out, and that cross-sell opportunities are not meaningful."

For those reasons, "we expect that PeopleSoft will likely need to make downward revisions to its license revenue guidance," Maynard wrote.

Oracle-PeopleSoft Software Saga A list of key events in Larry Ellison's hostile takeover bid.
June 2, 2003	PeopleSoft announces $1.7 billion J.D. Edwards acquisition ERT
June 6, 2003	Oracle announces $5.1 billion, or $16 a share, offer for PeopleSoft
June 6, 2003	PeopleSoft CEO Craig Conway calls Oracle offer "atrociously bad behavior"
June 12, 2003	PeopleSoft rejects Oracle offer
June 13, 2003	PeopleSoft sues Oracle, saying its bid is meant to undercut PeopleSoft business
June 18, 2003	Oracle ups its offer to $6.3 billion, or $19.50 a share
June 18, 2003	Connecticut files antitrust complaint against Oracle
June 20, 2003	PeopleSoft rejects new Oracle offer
June 30, 2003	Dept. of Justice makes a second request for information as part of antitrust review
Aug. 29, 2003	PeopleSoft completes J.D. Edwards acquisition, raising the value of Oracle's bid to $7.25 billion.
Jan. 23, 2004	Oracle names nominees to PeopleSoft board
Jan. 30, 2004	PeopleSoft schedules shareholders meeting for March 25
Feb. 4, 2004	Oracle sweetens bid to $9.4 billion, or $26 a share
Feb. 9, 2004	PeopleSoft rejects new Oracle offer
Feb. 26, 2004	Dept. of Justice, states recommend blocking the deal; Oracle vows to fight
March 25, 2004	PeopleSoft annual shareholder meeting
June 25, 2004	Expiration of Oracle's offer (updated)
Source: TheStreet.com