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PeopleSoft and JDE sue Oracle, alter merger terms

PeopleSoft and J.D. Edwards are asking the courts to stop Oracle from continuing with its takeover bid for PeopleSoft. They're also changing the terms of their proposed merger.

In the latest twist in the enterprise applications acquisitions squabble, PeopleSoft Inc. and J.D. Edwards & Co. are suing Oracle Corp. for interfering with their proposed merger and are also sweeting the terms of their agreement.

Once an all-stock deal, PeopleSoft is now offering J.D. Edwards shareholders the choice of cash, stock or a combination of both. The restructured deal now calls for PeopleSoft to pay out $863 million in cash and 52.6 million in newly issued shares.

In a statement, PeopleSoft said it hopes the new terms will speed its merger with J.D. Edwards and minimize customer uncertainty stemming for Oracle's takeover bid.

By adding cash to the table, stockholders no longer need to approve the merger.

Meantime, the companies are also pursuing litigation in their attempt to fend off Oracle.

On Friday PeopleSoft filed suit in California's Alameda County Superior Court, claiming the purpose of Oracle's takeover bid is to disrupt PeopleSoft's business and "undermine PeopleSoft's viability by creating uncertainty and doubt in the minds of PeopleSoft's customers and prospective customers," according to a statement.

The lawsuit seeks an injunction that would stop Oracle from proceeding with its takeover bid of PeopleSoft.

The suit also claims Oracle is misrepresenting its ability to support PeopleSoft products and misleading customers about the ease of upgrading to Oracle software. Oracle has said that if it acquires PeopleSoft it would phase out PeopleSoft tools.

J.D. Edwards has filed two lawsuits. One, in Colorado state court, seeks $1.7 billion in compensatory damages, the exact amount of the all-stock deal between PeopleSoft and J.D. Edwards. Denver-based J.D. Edwards is also asking for punitive damages.

J.D. Edwards also filed a separate suit in California state court against Oracle and two of its executives. The California suit alleges that Oracle, CEO Larry Ellison and executive vice president Chuck Phillips, engaged in wrongful conduct and unfair business practices. It seeks an injunction that stops Oracle from proceeding with its tender offer for PeopleSoft.

PeopleSoft and J.D. Edwards reached a merger agreement on June 2, only to have that deal derailed by Oracle's hostile takeover bid for PeopleSoft just four days later. PeopleSoft now says that combining its resources with J.D. Edwards will save $150 million to $200 million annually.

"Oracle's sole aim is to disrupt a merger that will create value for the key stakeholders of J.D. Edwards and PeopleSoft," J.D. Edwards CEO Bob Dutkowsky said in a statement. "Oracle's unsolicited offer for PeopleSoft will only destroy value for our companies' shareholders, customers and employees and the technology community overall. We will not sit by idly while Oracle pursues this arrogant, unlawful and destructive course of action."

In response, Redwood Shores, Calif.-based Oracle issued a statement reading, "Clearly PeopleSoft and JD Edwards prefer to fight in the courts than let shareholders decide."

On Thursday PeopleSoft announced that its board of directors had unanimously voted to recommend that shareholders reject Oracle's offer.

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