Oracle: Not Afraid of Poison Pill or Proxy Fight

SAN FRANCISCO — Oracle said a federal probe into its $7.3 billion hostile takeover bid for PeopleSoft seems to be the only thing standing in the way of its goal.

In a briefing with the press, Oracle Executive Vice President Chuck Phillips said approval from the U.S. Department of Justice is almost certain and subsequent stopgap measures to clearing the deal are almost moot.

“The next milestone is regulatory clearance from the DOJ, which is currently in the pre-notification process,” Phillips said at the company’s OracleWorld 2003 conference here. “We are more optimistic now and believe we have a good case as is. Nothing else is being brought to the table at this point. Time is on our side.”

Phillips also said Oracle will remain firm on its offer and not raise its bid price for PeopleSoft suggesting that the company would not want to bid against itself.

If the proposal does clear regulatory hurdles, it will still be subjected to a financial provision in PeopleSoft’s bylines against hostile takeovers. Known in financial circles as a poison pill, the clause is designed to protect people who own company stock from losing their shirt. If the pill is eliminated, shareholders could wage a proxy war and possibly pit PeopleSoft board members against each other. Phillips said neither was likely to happen.

“It is very rare that a poison pill stops a deal,” Phillips said. “Mostly what it does is buy you time to renegotiate prices. The likely scenario is that shareholders will ignore it in favor of completing the deal. Shareholders are not nearly as emotional as they once were but they can’t do anything right now because of the poison pill. As for the proxy fight, we have a few things up our sleeve.”

Outside of the DOJ’s investigation, 38 state attorneys general are also looking into the legal issues surrounding the case. Connecticut officials have filed an antitrust lawsuit against Oracle, alleging that its acquisition of PeopleSoft would interfere with the state’s current computer system conversion plan.

Analysts are split over the feasibility of Oracle’s proposal with most tending to say that Ellison will get his way.

But Loomis Sayles and Co. financial analyst Tony Ursillo told internetnews.com he’s skeptical about the deal being completed.

“In a nutshell there are too many groups of constituents that are against the merger,” Ursillo said. “Customers, competitiors, state AG’s are all coming out against Oracle. And as we saw with the Microsoft case, if you have enough people against a company’s business practices, the Justice department tends to address those concerns.”

Ursillo said his secondary concern is that Oracle will most certainly have to up its price for PeopleSoft now that the company has begun putting its balance sheet to work with a recently announced buyback and

As for customer concerns over integration and customer support, Ursillo says shareholders in the know are unfazed.

“If you take out a fierce competitor and eat up the maintenance revenue, I think that overwhelms the integration risk,” Ursillo said.

Phillips said it is unlikely that the company would hold a third town-hall meeting to address concerns by PeopleSoft investors.

RELATED NEWS AND ANALYSIS

• Ethics and Artificial Intelligence: Driving Greater Equality

  FEATURE |  By James Maguire,
  December 16, 2020

• AI vs. Machine Learning vs. Deep Learning

  FEATURE |  By Cynthia Harvey,
  December 11, 2020

• Huawei’s AI Update: Things Are Moving Faster Than We Think

  FEATURE |  By Rob Enderle,
  December 04, 2020

• Keeping Machine Learning Algorithms Honest in the ‘Ethics-First’ Era

  ARTIFICIAL INTELLIGENCE |  By Guest Author,
  November 18, 2020

• Key Trends in Chatbots and RPA

  FEATURE |  By Guest Author,
  November 10, 2020

• Top 10 AIOps Companies

  FEATURE |  By Samuel Greengard,
  November 05, 2020

• What is Text Analysis?

  ARTIFICIAL INTELLIGENCE |  By Guest Author,
  November 02, 2020

• How Intel’s Work With Autonomous Cars Could Redefine General Purpose AI

  ARTIFICIAL INTELLIGENCE |  By Rob Enderle,
  October 29, 2020

• Dell Technologies World: Weaving Together Human And Machine Interaction For AI And Robotics

  ARTIFICIAL INTELLIGENCE |  By Rob Enderle,
  October 23, 2020

• The Super Moderator, or How IBM Project Debater Could Save Social Media

  FEATURE |  By Rob Enderle,
  October 16, 2020

• Top 10 Chatbot Platforms

  FEATURE |  By Cynthia Harvey,
  October 07, 2020

• Finding a Career Path in AI

  ARTIFICIAL INTELLIGENCE |  By Guest Author,
  October 05, 2020

• CIOs Discuss the Promise of AI and Data Science

  FEATURE |  By Guest Author,
  September 25, 2020

• Microsoft Is Building An AI Product That Could Predict The Future

  FEATURE |  By Rob Enderle,
  September 25, 2020

• Top 10 Machine Learning Companies 2021

  FEATURE |  By Cynthia Harvey,
  September 22, 2020

• NVIDIA and ARM: Massively Changing The AI Landscape

  ARTIFICIAL INTELLIGENCE |  By Rob Enderle,
  September 18, 2020

• Continuous Intelligence: Expert Discussion [Video and Podcast]

  ARTIFICIAL INTELLIGENCE |  By James Maguire,
  September 14, 2020

• Artificial Intelligence: Governance and Ethics [Video]

  ARTIFICIAL INTELLIGENCE |  By James Maguire,
  September 13, 2020

• IBM Watson At The US Open: Showcasing The Power Of A Mature Enterprise-Class AI

  FEATURE |  By Rob Enderle,
  September 11, 2020

• Artificial Intelligence: Perception vs. Reality

  FEATURE |  By James Maguire,
  September 09, 2020