Oracle Corp.’s $26-a-share takeover offer for rival PeopleSoft Inc. is its “final offer,” Oracle Chief Executive Larry Ellison said in a letter sent to PeopleSoft shareholders on Tuesday.
PeopleSoft’s directors have refused to meet with Oracle to discuss the latest $9.4 billion offer and execute a definitive and “friendly” merger agreement, said the letter, also signed by Oracle Chief Financial Officer Jeff Henley.
“This is our final price, and we believe it represents a compelling value for all PeopleSoft stockholders, particularly in light of PeopleSoft’s recent guidance below consensus Wall Street estimates for its first-quarter revenue and earnings,” the letter said. Oracle’s latest offer was made Feb. 4.
Late last month, PeopleSoft forecast current-quarter revenue of $625 million to $635 million and earnings per share excluding items of 17 cents to 18 cents.
Analysts, on average, were predicting revenue would be $641.5 million and earnings per share excluding items will be 18 cents, according to Reuters Research, a unit of Reuters Group Plc.
“By rejecting our offer, PeopleSoft’s directors have sought to deny you -- the true owners of PeopleSoft -- the opportunity to sell your shares to Oracle for a substantial premium in an all-cash offer,” the letter said.
Ellison and Henley urged shareholders to tender their shares before the March 12 deadline, vote to approve Oracle’s proposal to increase the size of the PeopleSoft board to nine, and elect the five board candidates nominated by Oracle.
The vote outcomes will be decided at the annual PeopleSoft shareholder meeting on March 25.
PeopleSoft has rejected the latest offer, after snubbing two previous ones for $19.50 and $16 a share. The latest offer represents a 17.6 percent premium over PeopleSoft’s closing stock price of $22.10 on Tuesday. Oracle’s stock closed at $13.76, also on the Nasdaq.
The letter is dripping with criticism for PeopleSoft Chief Executive Craig Conway, a former Oracle executive, and the PeopleSoft board of directors, complaining that they “have devised schemes to further entrench and enrich themselves at your expense” and lobbied to persuade federal antitrust regulators to block the takeover.
“We believe that our offer will ultimately be allowed to proceed,” said the letter, which comes less than one week after U.S. Justice Department lawyers recommended that the agency block the merger.
The antitrust division chief at the department is expected to issue a final decision by March 2, and observers say it is unlikely to deviate from the staff recommendation.
Using bullet points, the letter uses sarcasm to highlight other actions of Conway and the PeopleSoft board.
“Was Mr. Conway representing your interests when he stated, ’I could imagine no price or combination of price and other conditions to recommend accepting the offer to our shareholders?”’ it asks, quoting from an interview in German newspaper Euro am Sonntag last June.
The letter also criticizes the board for: denying PeopleSoft shareholders the option of voting to reject the merger with J.D. Edwards; instituting a “poison pill” measure to make a takeover expensive by promising a customers two- to five-times money-back guarantee if Oracle or any other company acquires PeopleSoft; moving up the annual shareholder meeting by two months to reduce the time Oracle could solicit proxies; and awarding Conway a “golden parachute” benefit and severance package potentially worth more than $60 million.
A PeopleSoft spokesman did not return a call seeking comment.
The European Union is also investigating the antitrust implications of merging two of the three top suppliers of business application software. Germany’s SAP AG is the leader, followed by Pleasanton, California-based PeopleSoft and Oracle, based in Redwood Shores, California.
PeopleSoft and Oracle also have filed lawsuits against each other over the matter.
Ellison has said he would be interested in fighting a Justice Department challenge in court.