Oracle fails to seduce PeopleSoft with $9.4 b

NEW YORK: Software provider PeopleSoft Inc. on Monday advised its shareholders to reject a sweetened $9.4 billion takeover offer from rival Oracle Corp., setting the stage for a contentious board battle at PeopleSoft's shareholder's meeting next month.

PeopleSoft, based in Pleasanton, California, said its board believes the unsolicited $26-per share bid is still inadequate, even though it represented at 33 percent increase over Oracle's previous $19.50 per share bid.

Oracle, based in Redwood Shores, California, raised its takeover bid last week, saying the offer was its best and final offer. The company has also proposed replacing some of PeopleSoft's board members with its own at the company's annual board meeting on March 25.

But PeopleSoft said in a statement the offer still "does not begin to reflect the company's real value," and contends Oracle is using the public bid to damage the company with both customers and shareholders.

"Don't underestimate the significant additional value PeopleSoft can create once the disruption from Oracle's hostile activities end," the company said.

Specifically, PeopleSoft noted its current share price of $22.75 represents the low end of its historical valuation range and lower multiples than its peers, primarily due to, it believes, the uncertainly created by the Oracle bid.

Given its current 2004 earnings guidance of $0.92 to $0.95 per share, PeopleSoft said typical valuation multiples would place its stock price at a level that "far exceeds the offer price, even before taking into account a control premium."

PeopleSoft also noted that Oracle's bid also has yet to receive antitrust approval from either U.S. or European authorities.

Citigroup and Goldman, Sachs & Co. provided PeopleSoft with financial advice on the revised bid.

© Reuters