The vicious squabbling between Oracle Corp. and PeopleSoft Inc. shows no signs of slowing, with Oracle announcing late on Friday that it is reducing its bid for the software company because of "changes in market conditions". PeopleSoft immediately fired back an abrupt response saying that Oracle was attempting to damage its business.
There really is no love lost between the two companies' execs ever since Oracle made a hostile takeover bid for its competitor last June. It offered US$16 a share -- amounting to $5.1 billion. Shareholders and analysts complained the figure was too low, and so the company upped its offer in February to $26 per share, totalling $9.4 billion.
This huge increase was an effort to push the deal through against PeopleSoft's management -- many of whom looked likely to lose their jobs -- and before any of the regulators, who had been vigorously lobbied by PeopleSoft, stuck their noses in.
It didn't work though and the DOJ in the U.S. announced a week later that it was opposed to the deal because it would damage competition in the market and lead to a poor deal for consumers. Soon after, it said it would sue Oracle to prevent the takeover.
Oracle swiftly vowed to fight the DOJ. It was forced to end its effort to take over the PeopleSoft board by slipping in its own execs in an upcoming election however, and this led PeopleSoft to issue a mocking press release.
Oracle started lashing out against the DOJ, causing the DOJ to respond saying that Oracle was ripping customers off. It released details of where Oracle had discounted its products simply to prevent competitors from winning contracts.
If that wasn't bad enough, Oracle then picked a fight with the E.U., which also decided that a PeopleSoft merger would damage competition, calling it "over-zealous".
None of this looks good for Oracle. But the company is not known for its meekness and on Friday mischievously said it has revised its offer down from $9.4 billion to $7.7 billion ($26 a share to $22 a share). Why? "Our revised offer reflects changes in market conditions and in PeopleSoft's market valuation," said Oracle CFO Jeff Henley. "Our new offer represents a premium of 21 percent over PeopleSoft's closing price today of $17.30. That's a higher premium than our previous offer was on the date made, calculated on both a single day and 30-day moving average basis. I believe that this deal will benefit stockholders of both companies." It also extended the offer's deadline from June 25 this year to July 16.
PeopleSoft was not impressed. "PeopleSoft's Board previously reviewed Oracle's unsolicited offer three times, most recently at $26.00 per share," its statement read. "Each time the Board unanimously concluded that the offer undervalued PeopleSoft and recommended that PeopleSoft stockholders reject Oracle's offer and not tender their shares."
It then sticks it tongue out: "Given the significant anti-trust obstacles in both the United States and Europe, we do not believe Oracle's bid can be completed at any price."
And then the reason why Oracle decided to make the announcement: "We note that Oracle has timed this announcement on the eve of our annual Leadership Conference, our most significant customer event for senior executives with more than 2,500 attendees. This is one more instance of what we firmly believe is Oracle's ongoing effort to damage our business."
But, of course: "Consistent with its fiduciary responsibility, the Board will evaluate the reduced offer at a regularly scheduled board meeting later this month."
We reckon the board will say no.