U.S. Justice department goes to court to block Oracle's bid, PeopleSoft CEO calls on Oracle to drop its efforts
Oracle’s attempted takeover of PeopleSoft hit a roadblock on Thursday as the U.S. Justice department went to court to block the bid, arguing it would be anti-competitive.
Oracle immediately rejected the legal challenge, calling it “without basis in fact or law.” Oracle’s board of directors said it would vigorously challenge the U.S. Justice department’s attempt to block its bid.
“The department’s claim that there are only three vendors that meet the needs of large enterprises does not fit with the reality of the highly competitive, dynamic and rapidly changing market,” read a press release issued by Oracle. “(Oracle) believes that the combined company will be able to offer products and services at even lower prices.”
Since the litigation will extend beyond the PeopleSoft stockholders' meeting on March 25, 2004, Oracle said it is withdrawing the slate of independent directors and will not be soliciting proxies for use at the meeting. In addition, Oracle has extended its previously announced tender offer for all of the common stock of PeopleSoft, Inc. to midnight on Friday, June 25, 2004.
The tender offer was previously set to expire at midnight on Friday, March 12, 2004. As of the close of business on Thursday, February 26, 2004, a total of 5,294,574 shares had been tendered in and not withdrawn from the offer, Oracle said.
The decision by the U.S. Justice department to block Oracle’s bid is a victory for PeopleSoft, which has vigorously fought Oracle’s plans since it first announced its intention to swallow PeopleSoft nine months ago.
The Justice department, which has been joined by several states in opposing the deal according to the Financial Times, said the merger would eliminate competition between two of the largest software companies and would result in higher prices, less innovation and fewer choices for customers.
“We believe this transaction is anticompetitive, pure and simple,” said Hewitt Pate, assistant attorney general in charge of the department’s antitrust division. “Under any traditional merger analysis, this deal substantially lessens competition in an important market. Blocking this deal protects competition that benefits major businesses, as well as government agencies that depend on competition to get the best value for taxpayers’ dollars.”
PeopleSoft’s president and chief executive officer, Craig Conway, called on Oracle to drop its hostile bid now that the government has stepped in to stop it.
“Now that the antitrust day of reckoning has arrived and the Justice department has announced its decision to sue to block the transaction, it is time for Oracle to abandon its efforts to acquire the company,” said Conway. “Both companies should now devote all of their energy to competing in the marketplace to provide better products and services for customers. That's the PeopleSoft way of creating greater value for our stockholders.”
Oracle announced its intentions to takeover PeopleSoft in June 2003 with an offer of $16 per share. It has since upped the ante to $26 per share.
Oracle immediately rejected the legal challenge, calling it “without basis in fact or law.” Oracle’s board of directors said it would vigorously challenge the U.S. Justice department’s attempt to block its bid.
“The department’s claim that there are only three vendors that meet the needs of large enterprises does not fit with the reality of the highly competitive, dynamic and rapidly changing market,” read a press release issued by Oracle. “(Oracle) believes that the combined company will be able to offer products and services at even lower prices.”
Since the litigation will extend beyond the PeopleSoft stockholders' meeting on March 25, 2004, Oracle said it is withdrawing the slate of independent directors and will not be soliciting proxies for use at the meeting. In addition, Oracle has extended its previously announced tender offer for all of the common stock of PeopleSoft, Inc. to midnight on Friday, June 25, 2004.
The tender offer was previously set to expire at midnight on Friday, March 12, 2004. As of the close of business on Thursday, February 26, 2004, a total of 5,294,574 shares had been tendered in and not withdrawn from the offer, Oracle said.
The decision by the U.S. Justice department to block Oracle’s bid is a victory for PeopleSoft, which has vigorously fought Oracle’s plans since it first announced its intention to swallow PeopleSoft nine months ago.
The Justice department, which has been joined by several states in opposing the deal according to the Financial Times, said the merger would eliminate competition between two of the largest software companies and would result in higher prices, less innovation and fewer choices for customers.
“We believe this transaction is anticompetitive, pure and simple,” said Hewitt Pate, assistant attorney general in charge of the department’s antitrust division. “Under any traditional merger analysis, this deal substantially lessens competition in an important market. Blocking this deal protects competition that benefits major businesses, as well as government agencies that depend on competition to get the best value for taxpayers’ dollars.”
PeopleSoft’s president and chief executive officer, Craig Conway, called on Oracle to drop its hostile bid now that the government has stepped in to stop it.
“Now that the antitrust day of reckoning has arrived and the Justice department has announced its decision to sue to block the transaction, it is time for Oracle to abandon its efforts to acquire the company,” said Conway. “Both companies should now devote all of their energy to competing in the marketplace to provide better products and services for customers. That's the PeopleSoft way of creating greater value for our stockholders.”
Oracle announced its intentions to takeover PeopleSoft in June 2003 with an offer of $16 per share. It has since upped the ante to $26 per share.
