Is PeopleSoft waiting for the right price?

Steven Goldby, a PeopleSoft board member, testified Tuesday in the trial taking place in Delaware that a sale would be possible if Oracle upped its offer and there was a "high certainty" that the deal could close quickly.

Last week's departure of former PeopleSoft CEO Craig Conway, an outspoken foe of any such acquisition, has prompted speculation that the company now may be more receptive to a deal.

Goldby's remarks amplify what he said during his testimony on the witness stand Monday. In response to a question from an Oracle attorney, Goldby said the initial offer made last June was at a "price I considered ridiculously low."

But during the cross-examination Tuesday afternoon, he provided further insight into the reasoning behind the board's rejection of Oracle's previous offer.

The deal included certain conditions that would have allowed Oracle to withdraw its offer. PeopleSoft's directors, in turn, were more reluctant to sit at the negotiating table with its competitor, Golby said.

In addition, he said, PeopleSoft's business is highly dependent on its customers feeling assured that they will continue to receive support and upgrades to their software purchases. Prospective customers would be reluctant to purchase products if they believed PeopleSoft was on the verge of being acquired.

PeopleSoft's board was reluctant to enter into talks with Oracle at the risk of scaring off those customers, especially if Oracle could easily withdraw from negotiations, Golby said.

"We would lose further the confidence of our customers," Golby testified in court.

But he noted: "If there had been...and if there ever is an indication that Oracle is willing to pay what we consider to be the right price for the shareholders...and there is a high certainty of being able to close a transaction quickly, I personally would be open to discussions with Oracle."

A PeopleSoft representative denied Goldby's remarks indicated a change in stance. "There is no surprise here," PeopleSoft spokesman Steve Swasey said. "The board has always done and will continue to do what is right for shareholders."

In the Delaware trial, Oracle is seeking to remove PeopleSoft's shareholder rights plan, an anti-takeover measure commonly referred to as a "poison pill" and one of the last obstacles to the acquisition if the European Commission does not try to block the deal.

In addition, Oracle is asking the Chancery Court to prohibit PeopleSoft from continuing to offer its customer assurance program, which Oracle describes as a de facto poison pill but one that PeopleSoft views as necessary to continue to attract prospective customers.

Separately, a Prudential Securities analyst backed off his claim that PeopleSoft executives had recently visited Oracle's headquarters. Brent Thill, the analyst, said on Tuesday that a research note issued earlier in the day about the alleged visit had been wrong. He hinted, however, that some of PeopleSoft's board members may have visited the hostile bidder's Redwood Shores, Calif., campus.

"We spoke to a PeopleSoft senior executive who stated that none of PeopleSoft's senior management met with Oracle, however, the executive could not comment on the independent directors," Thill said in his follow-up note.

PeopleSoft's Swasey said neither report is accurate and that no PeopleSoft executives or boardmembers have met with Oracle. Oracle representatives would not comment on the Prudential report.

Yet Thill remained firm in his opinion that PeopleSoft has softened its stance on the Oracle bid, citing Goldby's testimony to support his view. "We would caution that we have no confirmation that a deal is imminent, but in our opinion, PeopleSoft is more willing to engage in a dialogue with Oracle regarding its takeover bid," he said.