Palo Alto, June 10: Oracle Corp. on Monday asked for a meeting with the board of directors of PeopleSoft Inc. and urged its smaller rival to drop a "poison pill" defense and the threat of a lawsuit as the battle lines hardened in its $5.1 billion hostile takeover bid. Meanwhile, J.D. Edwards & Co. executives -- who have seen their company's pending acquisition by PeopleSoft thrown into question -- called Oracle's move a "half-baked" offer that would crimp competition in the business software market and raise antitrust concerns.
Oracle, the world's second-biggest software maker, on Friday announced its plan to bypass PeopleSoft management and acquire the company by offering stockholders $16 per share in cash.
Oracle said it was spurred to action by PeopleSoft's plan, announced last Monday, to buy J.D. Edwards in a friendly stock deal now valued at $1.85 billion.
PeopleSoft and J.D. Edwards focus on business-management applications that automate such business areas as accounting, purchasing and human resources.
Their merger would help PeopleSoft leapfrog Oracle in the application software market, giving the Pleasanton, California-based company the No. 2 spot behind Germany's SAP AG.
PeopleSoft shares have spiked since the Oracle bid, causing the value of its prospective deal with J.D. Edwards to jump from $1.7 billion. At the same time, PeopleSoft's current stock price of $17.90 has added to speculation that Oracle may have to sweeten its offer or that another white-knight bidder could emerge for the software company.
Oracle's is one of the biggest hostile takeover bids to rock the software industry, which saw International Business Machines Corp. buy 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.
In a conference call with reporters, Oracle Executive Vice President Charles Phillips defended the cash offer, which he described as less risky for shareholders than any competing bid based on stock.
Oracle Chief Executive Larry Ellison in a letter to PeopleSoft's board released on Monday also urged the company to drop its opposition to Oracle's bid.
Intended to foil a hostile takeover, PeopleSoft's poison pill could make it harder to remove incumbent directors. It also would allow the company to issue new preferred shares, making an outside bid prohibitively expensive.
Ellison said Oracle has received notice that PeopleSoft intended to file a lawsuit against it but said that the matter would be decided by shareholders and not "frivolous litigation."
A PeopleSoft spokesman said the company is not commenting on its legal strategy at this time.
J.D. Edwards Chief Executive Robert Dutkowsky said Oracle's $16-per-share offer made "no sense" for investors and that its takeover of PeopleSoft would "drive out customer choice completely" since Oracle would stop selling PeopleSoft applications and migrate those users to its own products.
The deal could be blocked by anti-trust regulators in the United States and the European Union, he added.
Oracle is the world's largest maker of modern database software that companies use to store and analyze business data, but it has struggled to grow in the applications market dominated by SAP.
Oracle -- which also moved its quarterly earnings report forward by several days to Thursday -- has not said whether it would buy J.D Edwards if the deal with PeopleSoft succeeds.
PeopleSoft Chief Executive Craig Conway, a former Oracle executive, has said he could not recommend Ellison's bid under any circumstances since the offer was an attempt to disrupt its own announced merger.
Oracle shares finished down 23 cents, or nearly 1.8 per cent, at $12.86 on Nasdaq. J.D. Edwards' stock slipped 13 cents to close at $13.07, also on Nasdaq.
Bureau Report