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Oracle Says It May Have to Abandon Hostile PeopleSoft Tender

Oracle Says It May Have to Abandon Hostile PeopleSoft Tender

Oracle has to get PeopleSoft's acquisition-activated refund program aka its Customer Assurance Program enjoined tout suite or else it may have to drop its $7.3 billion hostile bid for the company as economically unreasonable, according to what Oracle said Monday to the Delaware Chancery Court where it's also challenging PeopleSoft's poison pill.

For public consumption, Oracle, which previously played the PeopleSoft refund scheme as either desperate or irrelevant, is saying it's still devoted to the acquisition.

Meanwhile, a group of PeopleSoft shareholders, claiming PeopleSoft breached its fiduciary duty in rejecting the Oracle bid, asked the court to quash the "draconian" refund scheme last week.

To run Oracle off by forcing it to pay more than it wants for PeopleSoft and keep business coming in at the same time, wily PeopleSoft has been promising customers that their license fees would be refunded to the tune of a two- to fivefold windfall if Oracle takes it over any time in the next two years or reduces support for PeopleSoft software any time in the next four years. PeopleSoft quietly doubled the scheme's deadlines in Q3.

PeopleSoft said last month that the potential refund amount stood at $800 million.

Oracle calls the money-back offer a "self-serving" and "entrenchment-motivated" device on the part of the PeopleSoft board and claims it reflects the company's "blatant disregard for shareholder value and choice" and a way to "secure management's record pay packages such as [CEO] Craig Conway's which, according to Fortune Magazine, is valued at more than $112 million."

The Justice Department is still reviewing the antitrust implications of Oracle's bid, which PeopleSoft says would only leave one other CRM player in the market.

USA Today, which says its quoting "lawyers close to the deal" - possibly from PeopleSoft obviously - the DOJ, which has been collecting affidavits from worried PeopleSoft customers, is going to shoot down Oracle's bid.

Oracle is now telling people that it may take Justice until January to say aye or nay and Europe may also take the long route; it won't decide until Monday. Oracle has previously been saying that the DOJ decision will any minute now.

Oracle's bid of $19.50 a share has been less than PeopleSoft's stock price for weeks now and would presumably have to be hiked to succeed.

Oracle's bid has been widely suspected as being insincere and simply motivated by a desire to disrupt a rival.

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Maureen O'Gara the most read technology reporter for the past 20 years, is the Cloud Computing and Virtualization News Desk editor of SYS-CON Media. She is the publisher of famous "Billygrams" and the editor-in-chief of "Client/Server News" for more than a decade. One of the most respected technology reporters in the business, Maureen can be reached by email at maureen(at)sys-con.com or paperboy(at)g2news.com, and by phone at 516 759-7025. Twitter: @MaureenOGara

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