Oracle says PeopleSoft rebate plan may imperil bid
In its hostile takeover bid for PeopleSoft, Oracle asked a court to expedite its request for an injunction against a PeopleSoft rebate program that takes effect upon an acquisition.
The Justice Department is reviewing Oracle's $7.3 billion hostile bid for PeopleSoft, announced last spring. The review is expected to last until the end of the month.
Oracle asked for the injunction this summer in the Delaware Court of Chancery. A group of PeopleSoft shareholders filed suit in the same court on Thursday, seeking to force PeopleSoft to stop offering a refund to customers who buy its software.
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PeopleSoft disclosed last month that it had revised the terms of the rebate program to allow customers to receive refunds if PeopleSoft were acquired within the next two years, rather than only one year, and if the buyer reduced support for PeopleSoft products within four years, rather than two.
In its motion, Oracle said, "Indeed, if the PeopleSoft board is permitted to continue to issue self-serving, entrenchment-motivated contracts under the revised money-back offer, Oracle may be forced to abandon its bid, as it will no longer be economically reasonable."
PeopleSoft executives said last month that the program could amount to as much as $800 million in rebate fees, far more than the company originally estimated. A spokesman for PeopleSoft, Steve Swasey, said, "The customer assurance program serves customers; in that way it's good for shareholders."
Before the revision of the program, Oracle executives had publicly said the customer assurance program was a moot point because the company expected to meet its conditions after the acquisition.
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