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Date Posted: 8/27/2003
PeopleSoft Alleges Oracle Execs Knew Bid Would Harm Firm
lo Prince
NEW YORK -- Oracle Corp. executives knew their unsolicited takeover bid for rival PeopleSoft Inc. (NasdaqNM:PSFT - News) would hurt the company's business, PeopleSoft alleges in its lawsuit against Oracle. PeopleSoft's amended complaint, which was filed with portions redacted earlier this month, highlights snippets from a number of internal Oracle documents. Dow Jones Newswires obtained a copy of the complaint Tuesday with material that was previously withheld.
"We've certainly wounded PSFT. ... Even if we don't end up closing the deal, this is going to take PSFT time to recover," one unidentified Oracle employee wrote in an e-mail the day after Oracle announced its bid, according to PeopleSoft's lawsuit.
The complaint was filed two weeks ago in Alameda County Superior Court. It alleges Oracle's acquisition bid, which was initiated in June and is now worth $ 7.3 billion, was made only to disrupt PeopleSoft's business and customers.
Jim Finn, an Oracle spokesman, said in a written statement that PeopleSoft's lawsuit is "rife with comments taken out of context" and said Oracle "has nothing to hide in its legitimate effort to acquire PeopleSoft."
He added Redwood Shores, Calif.-based Oracle is "confident that we will successfully defend against the action and we are unwavering in our commitment to acquire PeopleSoft."
Steve Swasey, a spokesman for Pleasanton, Calif.-based PeopleSoft, said the lawsuit "speaks for itself."
PeopleSoft's complaint alleges Oracle executives intended to stop selling and supporting PeopleSoft products when Oracle launched its tender offer on June 5.
The lawsuit highlights a portion of an e-mail from Safra Catz, an Oracle executive vice president, sent the day after Oracle announced its tender offer. "This is a really exciting opportunity for Oracle," Catz wrote to colleagues. " Though we really won't be continuing their product line or combining operations, there will no doubt be challenges."
Mr. Finn said the statement was taken out of context. Ms. Catz's e-mail, which Oracle provided to Dow Jones Newswires, includes a list of "talking points" that show Oracle didn't intend to sell PeopleSoft products to new customers, but planned to provide extended support to existing customers.
"The fact that Oracle does not intend to actively market the PeopleSoft line does not detract from its commitment to support and enhance the products as it has previously stated," said Mr. Finn.
PeopleSoft's complaint also argues Oracle executives mislead the public about how complicated and costly it would be for PeopleSoft customers to switch to Oracle software. It highlighted an e-mail from Charles Phillips, an Oracle executive vice president, to a PeopleSoft customer.
"You are correct that migrating between releases is never cost free and consulting is involved. We never said otherwise and that's a fact of life as anyone remotely familiar with software knows," Mr. Phillips wrote, according to PeopleSoft's complaint.
PeopleSoft's board has rejected Oracle's offer and opted to accelerate its proposed merger with fellow software company J.D. Edwards & Co. . PeopleSoft has purchased about 86% of J.D. Edwards shares and expects to complete the $1.8 billion transaction as early as this week.
Oracle has extended its tender offer for PeopleSoft shares until midnight Sept. 19. Its proposed takeover has been put on hold by an extended review by antitrust regulators. Mr. Phillips recently said the review may not be completed until November.
-By Marcelo Prince; Dow Jones Newswires; 201-938-5244; marcelo.prince@dowjones.com
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