PeopleSoft investigates key Oracle executives

12 Jan 2004

PeopleSoft, which is facing a hostile takeover bid by Oracle, has called for permission to interview half a dozen Oracle executives as part of its lawsuit alleging unfair business practices.

The ERP (enterprise resource planning) software vendor whose attempt to acquire JD Edwards was nearly blown out of the water by a US$6bn rival bid by Oracle for PeopleSoft, is seeking a California court’s permission to interview a number of key executives. The list includes the company’s executive vice president of global support services and its senior vice president of applications development.

The bid is understood to be motivated by allegations that Oracle misled the public and PeopleSoft customers on the level of support and ease of migrating to the Oracle platform.

PeopleSoft also alleges that Oracle is maintaining a “highly uncertain” tender offer, keeping its bid substantially below its current share price and therefore delaying the resolution of disputes surrounding its offer for JD Edwards. This uncertainty, it claims, is creating fear and doubt among PeopleSoft’s current and future companies.

The company is seeking to interview Oracle employees responsible for supporting and developing software applications similar to PeopleSoft products who would be familiar with enterprise support and product migration issues.

Despite the ongoing proceedings, a senior PeopleSoft executive told that the Oracle bid for the company was effectively “dead in the water.” Crosbie Burns, Peoplesoft vice-president and UK & Ireland managing director, said the bid faces a number of obstacles that together make it unworkable. Firstly, Peoplesoft’s results have exceeded the market’s expectations in the last two quarters, contrary to what Oracle predicted would happen. Secondly, Oracle’s tender offer price is below Peoplesoft’s current share price and only 6pc of Peoplesoft shareholders are in favour of the bid anyway. Thirdly, the US Department of Justice and European Commission are investigating it from a competitive point of view and are unlikely to support it.

Lastly, the way in which Peoplesoft is incorporated in State of Delaware means that the state laws of incorporation would have to be overturned for Oracle’s bid to be accepted – an unprecedented event, according to Burns. Finally, Oracle itself is in no shape to acquire a competitor, he argued.

By John Kennedy