Hours after PeopleSoft Inc.'s board of directors said it would recommend that shareholders reject Oracle Corp.'s revised takeover offer, Oracle tried to reassure current PeopleSoft customers that it would not force them to upgrade.
Oracle executive vice president Chuck Phillips clarified Oracle's plan for PeopleSoft products, stating that existing customers can choose to stay with the applications indefinitely. He vowed that Oracle would offer continued enhancements and maintenance and said the database giant would take no action to reduce PeopleSoft functionality.
"No customer will be required or forced to move to Oracle products. Period," Phillips said. "We wouldn't be willing to pay $6 billion for these customers if we didn't want them."
Oracle is also giving customers the option of a module-for-module upgrade to the Oracle E-Business Suite without incurring new licensing fees. But Oracle has not announced plans to help customers cover the significant implementation costs of such a move.
Phillips said the migration would be no more difficult or expensive than moving from PeopleSoft 7 to PeopleSoft 8. He said Oracle would work on building more robust migration tools but that there is "no rush to do this."
He added that Oracle might incorporate some elements of PeopleSoft technology in future releases but said "there's not much that we're missing."
Also today, PeopleSoft announced that its board of directors voted unanimously to recommend that shareholders reject Oracle's latest offer of $6.3 billion, or $19.50 per share.
Pleasanton, Calif.-based PeopleSoft said the deal undervalues the company, given its current financial performance and its prospects for growth if it succeeds in acquiring Denver-based rival J.D. Edwards & Co.
Oracle first launched a hostile takeover June 6, presenting PeopleSoft shareholders with a $5.1 billion bid. It upped the ante Wednesday morning in a move seen by some as a sign that Oracle was serious about acquiring PeopleSoft.
"PeopleSoft is committed to the J.D. Edwards acquisition," PeopleSoft CEO Craig Conway said in a statement. "We believe that the continued execution of our strategy will create significantly higher stockholder value."
The PeopleSoft board's decision was based on the recommendation of a committee of independent directors evaluating the Oracle offer. As it did when rejecting Oracle's initial offer, the board said this new deal would be subject to regulatory delays and the "significant likelihood that the transaction would be prohibited."
The board also said the offer was risky because it is "highly conditional and Oracle could withdraw it at any time."
Oracle's Phillips denounced PeopleSoft's management for refusing to meet with Oracle.
"All they did was take the same press release, change the date on it and send it out again," he said.
On a recent three-day road show, Phillips said, he met with roughly half of PeopleSoft's institutional shareholders and got a "good response" from them.