PeopleSoft drops suit threat, says Oracle

LOS ANGELES: Oracle Corp has said that rival PeopleSoft Inc. had dropped plans to file a lawsuit to block Oracle's $5.1 billion hostile takeover bid.

'We are hopeful that this apparent change in course indicates that the PeopleSoft Board will be willing to meet with us to discuss our offer,' Oracle Executive Vice President Safra Catz said in a statement.

PeopleSoft could not be reached immediately for comment but the company has dismissed Oracle's bid as an attempt to disrupt its own friendly acquisition of Denver-based J.D. Edwards & Co

Oracle on Friday announced its plan to bypass PeopleSoft's management and acquire the company by offering stockholders $16 per share in cash.

Shares in PeopleSoft have since traded above that offer, indicating that investors see a chance for Oracle to raise its bid or for another suitor to emerge.

PeopleSoft's purchase of J.D. Edwards & Co. in a stock deal valued at $1.85 billion would allow it to overtake Oracle in the market for business applications such as accounting, purchasing and human resources.

Germany's SAP is the leader in that market, although Oracle is a larger software maker, second only to Microsoft Corp., thanks to its market-leading database software which holds and manages data such as customer information and addresses.

J.D. Edwards spokesman Victor Chayet said the company would not comment on PeopleSoft's legal actions.

'PeopleSoft is taking steps to protect their shareholders as we are. We are both focused on closing the definitive merger agreement agreed on June 2,' he said.

Oracle, which has not said whether it would seek to acquire J.D. Edwards, said on Tuesday that it had been warned previously by PeopleSoft that a court challenge was imminent.

'PeopleSoft decided not to commence litigation against Oracle on June 9 and canceled its plan to appear in court today,' Oracle said.

Oracle's is one of the biggest hostile takeover bids to rock the software industry since IBM bought e-mail provider Lotus Development Inc. in what began as an unfriendly, unsolicited bid in 1995.

The deal, which would be Oracle's largest acquisition by far, could also be a harbinger of increased consolidation in the software market as executives try to win customers amid dwindling corporate spending on new technology.

PeopleSoft also has a 'poison pill' involving issue of new preferred shares that is intended to thwart a hostile takeover and Oracle Chief Executive Larry Ellison has urged the company to drop that defense.

© Reuters