20 June 2003 The board of PeopleSoft, the US enterprise applications software company, has rejected the latest unsolicited bid from rival Oracle to buy the company.
In a statement following a board meeting today, the management said that the $6.3 billion bid from Oracle undervalued the company. It also cited antitrust concerns, saying that the “proposed combination of PeopleSoft and Oracle faces substantial regulatory delays and significant likelihood that the transaction would be prohibited.”
Craig Conway, the CEO, said that company remains committed to buying JD Edwards, the application software company.
The PeopleSoft statement follows the filing of an antitrust lawsuit by the State of Connecticut, a big PeopleSoft customer, earlier in the week. It claims that it is likely to be joined by a number of other PeopleSoft customer, concerned at the potential costs of such a takeover.
“The question is, what will happen to the company during the period of time this is in limbo? What damage is going to be done to customer relationships?” Gary Reback, an antitrust lawyer advising PeopleSoft on the deal, told The Washington Post.
Furthermore, the report claims that the Justice Department has already confirmed to both companies that it will review the potential antitrust implications of any proposed takeover of PeopleSoft by Oracle.
When Oracle increased the size of its bid for PeopleSoft from $5.1 billion to $6.3 billion, many observers, such as Hasso Plattner, the co-founder of enterprise applications market leader SAP, suggested that the takeover battle was as good as won.
They believed that the PeopleSoft board would not be able to turn down the offer — regardless of how they felt about selling out to Oracle.
But PeopleSoft has a number of powerful defenders in US government, given that more than a fifth of its 5,000 customers come from the public sector.