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Oracle may drop PeopleSoft lawsuit

Oracle says it will nix the claim unless PeopleSoft shareholders agree to sell at least half their holdings by Nov. 19.

The clock is really ticking on Oracle's $8.8 billion PeopleSoft bid.

Oracle plans to drop a suit against PeopleSoft if it fails to convince PeopleSoft shareholders to sell at least half of the company's 367 million outstanding shares by Nov. 19--the date that the current offer expires.

The Redwood Shores, Calif., company outlined its plan in a letter Friday to Judge Leo Strine of the Delaware Chancery Court, reiterating its intention to call off the PeopleSoft deal if shareholders don't get on board soon.

"Oracle's best and final offer expires on Friday, November 19," the letter states. "Under the terms of the offer, if less than 50 percent of PeopleSoft's shares are tendered by that date, the Oracle tender offer will end. In that event, Oracle will drop its claims before this Court."

The letter, signed by Oracle attorney Michael Carroll, asks Strine to postpone a Friday hearing related to the case until after the Nov. 19 expiration of its bid.

Oracle is suing PeopleSoft in an effort to invalidate the company's "poison pill" anti-takeover provision, which makes a hostile buyout prohibitively expensive. The suit also seeks to cease PeopleSoft's "customer assurance program," a money-back guarantee that could trigger more than $2 billion in payments in the event of a buyout.

In its 17-month quest to acquire its software rival, Oracle has changed the expiration date and price of its bid many times. In February, Oracle raised the bid to $26 per share and called that its "final price." It has since changed the price twice, lowering it in May to $21 per share as it headed to court to fight a federal antitrust suit against the deal and bumping it up again on Nov. 1 to $24, calling that one its "best and final" offer with all antitrust charges cleared.

With the letter to Strine, it appears Oracle is serious about the offer being final this time. The $24 offer represents a 4 percent premium on the stock, which closed on Monday at $23.15 on anticipation that Oracle will prevail. It's a 59 percent premium on the $15.11 closing price of the stock on June 5, 2003, the day before Oracle launched its surprise bid.