Oracle takes appeal to PeopleSoft shareholders

With the clock ticking on an expected U.S. Department of Justice (DOJ) ruling on Oracle Corp.’s hostile bid for PeopleSoft Inc., Oracle has appealed directly to PeopleSoft shareholders to facilitate the deal before it is too late.

Oracle on Tuesday sent PeopleSoft stockholders a letter, signed by Larry Ellison, Oracle’s chief executive officer (CEO), and Jeff Henley, the company’s chairman and chief financial officer (CFO), asking that they tender their shares to Oracle by mid-March and elect Oracle’s nominees to PeopleSoft’s board next month.

PeopleSoft’s board of directors has repeatedly rejected Oracle’s overtures since last June, including a sweetened offer earlier this month of $26 per share that raised the all-cash deal’s total to $9.4 billion. That is up from Oracle’s opening offer of $5.1 billion for control of the company. Oracle’s tender offer expires on March 12.

“The pattern of conduct by (PeopleSoft CEO) Mr. (Craig) Conway and his Board of Directors over the past eight months and their evident lack of concern for stockholder rights have left us with no choice but to take this matter directly to you — the true owners of PeopleSoft,” the letter states.

The move comes about two weeks before the DOJ’s ruling on the proposed merger, which is expected no later than March 2. Last week it was revealed that officials in the DOJ antitrust division made a recommendation to the department to block the proposed acquisition as it could weaken competition within the market. PeopleSoft and Oracle currently hold the No. 2 and 3 positions in the enterprise applications market, behind SAP AG.

Despite such negative indications from the DOJ, Oracle remains convinced it can change the minds of PeopleSoft shareholders and push the deal through to completion. “We believe that our offer will ultimately be allowed to proceed,” the letter said.

As in the past, Oracle accused PeopleSoft’s board of not acting in the best interests of its shareholders.”We have serious concerns about the actions of PeopleSoft’s CEO and the other members of its Board, who have persistently attempted to prevent you from freely considering our offer through a variety of impediments and roadblocks.”

The letter outlines a list of grievances against PeopleSoft’s board of directors including a concerted campaign to mislead PeopleSoft’s customers about Oracle’s offer, as well as a $60 million “golden parachute” benefit and severance package granted to Conway by the board.

The letter also targeted PeopleSoft’s upcoming annual shareholder meeting on March 25, by urging shareholders to expand PeopleSoft’s eight-seat board to nine seats while also electing five candidates that Oracle has nominated.

Oracle said it will send PeopleSoft’s shareholders proxy materials to elect its replacement list of directors and amended materials on its tender offer.