Monday, October 25, 2021

PeopleSoft Extends Refund Program Deadline

In the continuation of its attempt to ward of a hostile takeover by applications rival Oracle , PeopleSoft said it would extend until March 31 the deadline for a refund program that industry-watchers call an “unofficial” poison pill.

That “pill” is a Customer Assurance Program that promises PeopleSoft customers refunds of between two and five times their license
fee in the event PeopleSoft is acquired and the acquiring company
discontinues PeopleSoft software support.

Should the CAP kick in upon successful acquisition by Oracle it would cost Oracle about $807 million in potential
liabilities if it decided to drop support for PeopleSoft
software. The CAP, launched after Oracle made its play for PeopleSoft in
June, is what bumped PeopleSoft’s current price tag to an estimated $7.5 billion from $7.3 billion.

Not all PeopleSoft shareholders agree with the CAP. Some said in
a November lawsuit filing that the CAP is a “nonredeemable poison pill that
is draconian in its effect” because it would scare off those interested in
making a sweeter offer.

“This program has never been about customer assurance, it has always been about entrenching the PeopleSoft management team,” said Oracle spokesman Jim Finn.

The March 31 deadline PeopleSoft announced is situated a day after the
European Commission’s deadline for investigating whether or not the
unsolicited bid would hurt the market and customers if it were allowed to
succeed.

But that deadline took a hit recently as the EC has formally requested
additional information from Redwood Shores, Calif. database giant Oracle.

An EC spokeswoman said the
organization has “stopped the clock” with regard to the deadline by which it
expects to wrap up its investigation into the Oracle/PeopleSoft affair.

Meanwhile, the U.S. Department of Justice is currently making its own
inquiry into the bid to determine whether it is anticompetitive in nature,
as PeopleSoft claims, or if it is good for customers, which is Oracle’s
line.

After purchasing J.D. Edwards for $1.75 billion last year, PeopleSoft is
currently the No. 2 applications maker in the market behind German leader
SAP. Were Oracle to succeed in buying PeopleSoft, it would claim the No. 2
crown.

PeopleSoft has been taking other measures of self-preservation, including an
old-fashioned poison pill, as well as regular stock buybacks of $350 million
in December and $200 million earlier this week, respectively.

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