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Oracle woos shareholder group

The software maker and its director nominees for PeopleSoft's board meet with Institutional Shareholder Services to persuade the influential group to recommend the slate to institutional investors.

Oracle and its director nominees for PeopleSoft's board have met with an influential shareholder group, in an effort to persuade it to recommend the opposition slate to institutional investors.

The business software maker and its nominees discussed their views on the merger proposal with Institutional Shareholder Services at the meeting on Tuesday, according to Patrick McGurn, a special counsel at ISS. Oracle has proposed replacements for four PeopleSoft board members up for re-election as part of a bid to take over its software rival, which is being blocked by so-called poison pill measures.

"They (the Oracle nominees) were noncommittal on whether they would vote to lift the poison pill," McGurn said. "We've seen some boards use the poison pill to get a higher bid, and others use it to hide behind so they don't have to sell the company."

A recommendation from ISS, which advises pension funds and other institutional investors on how to vote their shares on proxy matters, would aid Oracle's efforts to gain control of PeopleSoft's board at an upcoming annual shareholder's meeting. In turn, this could help Oracle's attempt to acquire PeopleSoft.

PeopleSoft, which rejected Oracle's last bid, has refused to meet with its competitor to discuss a possible merger.

Oracle has publicly stated its last $26-a-share bid is its "final" offer. However, when asked about the current bid, McGurn said Oracle executives left a "little crack of sunlight through the door."

"They said they had no immediate plans to change it," McGurn said. "They didn't repeat their mantra that 'This is the best and final price.'"

Oracle and PeopleSoft declined to comment.

ISS met with Oracle executives Chuck Phillips and Safra Catz (co-presidents) and Jeff Henley (chairman) as well as four of the five opposition slate nominees.

To move forward with its takeover bid, Oracle needs PeopleSoft to remove the poison pill and must clear antitrust regulatory hurdles.

Oracle executives were adamant that an antitrust regulatory review of the merger would not be an impediment to closing the deal, McGurn said. The U.S. Department of Justice is expected to make a final decision on the deal by March 2, and PeopleSoft is scheduled to hold its annual shareholders meeting several weeks later, on March 25.

"The...director (nominees) don't view their role in the context of the offer or (of) whether the deal gets approval from regulators," McGurn said, noting the candidates would likely remain on the PeopleSoft board if elected, even if the deal is ultimately rejected.

ISS, which has about 750 clients, hopes to make its recommendation around the first week of March, McGurn said. PeopleSoft is scheduled to meet with the shareholder group next week.

The group has seen its share of high-profile proxy battles, including the merger between Hewlett-Packard and Compaq. In that case, dissident board member Walter Hewlett launched a proxy fight to nix the proposed deal. ISS, however, sided with HP management and recommended passage of the merger.