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PeopleSoft renews customer refund plan

The software maker has restarted a customer refund program that's designed to counter the potential harm to its sales from Oracle's hostile buyout offer.

PeopleSoft has restarted a customer refund program that's designed to counter the potential damage to its sales from Oracle's hostile buyout offer, a PeopleSoft spokesman confirmed Tuesday.

PeopleSoft introduced the money-back guarantee last quarter, after Oracle launched its tender offer on June 6, sparking the most closely watched merger battle in the computer industry since Hewlett-Packard acquired Compaq Computer.

Under the program, PeopleSoft customers that purchase new software would be owed a refund of two to five times the cost of their software license fees if PeopleSoft is acquired and the acquiring company stops selling its products. The original refund program expired June 30. This quarter, which ends Sept. 30, the offer will include customers of both PeopleSoft and J.D. Edwards, a rival company PeopleSoft recently bought.

If Oracle or another company acquires PeopleSoft, the acquiring company would be legally obligated to make hundreds of millions of dollars in refund payments should it trigger the preconditions. Oracle has said previously that it would not market and actively sell PeopleSoft products if its $7.25 billion tender offer, which expires on Sept. 19, is accepted.

"It's like an insurance program," PeopleSoft spokesman Steve Swasey said.

PeopleSoft said a number of customers took the company up on the refund program during the quarter ended June 30, though it won?t disclose exactly how many. Overall, PeopleSoft posted strong results, signing more than 100 new deals during that quarter, up from 72 in the same quarter the year before, Swasey said.

Maintaining healthy sales is a critical part of PeopleSoft?s strategy to fend off Oracle?s bid. If sales slip, investors could lose confidence in the company and send its stock down, increasing pressure on shareholders to tender their shares to Oracle, which is offering $19.50 per PeopleSoft share. PeopleSoft?s stock closed at $17.30 per share on Tuesday.

The refund program--along with a lawsuit, a "poison pill" and antitrust allegations--is one of the many tactics PeopleSoft has used to dig in its heels against Oracle.

In the meantime, PeopleSoft folded in J.D. Edwards as a wholly owned subsidiary last month. It expects to complete the merger by the end of the week by acquiring the remaining 12 percent of outstanding J.D Edwards shares. At that point, PeopleSoft will retire the J.D. Edwards name and ticker symbol, Swasey said.

PeopleSoft plans to further discuss its J.D. Edwards integration plan on Sept. 4 in New York.