Oracle Says PeopleSoft Refunds Jeopardize Buyout Offer

The warning comes in a court filing seeking an injunction.
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A controversial license-fee refund program adopted by

PeopleSoft

(PSFT)

following

Oracle's

(ORCL) - Get Report

hostile buyout offer reportedly could cause Oracle to walk away from its $7.3 billion bid.

Oracle made a filing with the Delaware Chancery Court Monday saying that if an injunction isn't issued blocking the software-licensing refund policy, it might be forced to drop the buyout offer,

The Wall Street Journal

reported.

TheStreet.com

has reported that the refunds -- in which customers are promised between two and five times their money back on software purchases in the event Oracle prevails -- have been instrumental in preventing client defections from Peoplesoft since the buyout offer was first announced this summer.

As reported Friday, a group of angry PeopleSoft shareholders filed suit against the company over the guarantees, which the company calls a "customer assurance program," arguing it is a "nonredeemable poison pill" that can't be rescinded if the hostile bids wins out.

Oracle, which is offering $19.50 a share cash for PeopleSoft, said in the filing Monday: "If the PeopleSoft board is permitted to continue to issue self-serving, entrenchment-motivated contracts under the revised money-back offer, Oracle may be forced to abandon its bid as it will no longer be economically viable."

Oracle was recently up 24 cents, or 2%, to $12.81 on the Instinet premarket session. PeopleSoft closed Monday at $22.05.