November 19, 2004
Oracle Makes Late Pitch For PeopleSoft Shareholders
Oracle is making an 11th-hour appeal to PeopleSoft shareholders as its "final" offer nears expiration. PeopleSoft Chairman Dave Duffield, in turn, released a personal letter he sent to Larry Ellison rebutting Oracle's "distortions" concerning his PeopleSoft stock sales.
Thursday, the day before Oracle's $24-per-share offer for PeopleSoft is due to expire, Oracle chairman Jeffrey Henley charged that PeopleSoft's board of directors is misleading shareholders and unable to counter with value that matches Oracle's $8.8 billion offer. The PeopleSoft board has charged that Oracle's offer "undervalues" the company.
"Our offer represents a 60% premium to PeopleSoft's share price at the time of our original offer, and it is above the 52-week closing price," Henley stated in the letter. "They have responded to our offer in characteristic fashion: by attempting to change the subject and issuing what analysts have described as unobtainable financial projections." Henley cited Drew Brousseau of S.G. Cowen & Co. as an example of an analyst who considers the Oracle offer a good one. Brousseau has concluded that, "ultimately, a deal will be completed."
But that was by no means clear Thursday. Oracle didn't say how close it was to controlling the 50% shares that it needs to take control of PeopleSoft's board. Its last comment on shares tendered indicated that as of Nov. 1 it held 20.2 million of a total 370 million shares, or about 5.5%.
Henley's letter didn't offer a new total on the number of shares tendered but said it was seeking "a majority of PeopleSoft's outstanding shares--approximately 188 million shares." But earlier this week, Oracle did say that Capital Guardian Trust, an institutional investor, plans to tender its 37 million shares or 10.2% of PeopleSoft's outstanding stock. "The PeopleSoft board has for 17 months acted to deny stockholders the opportunity to consider our offer," Henley added.
Duffield's letter, also released Thursday, didn't directly respond to Oracle's last-minute appeal for shares. Rather, it was written, Duffield said, to rebut charges that he says Oracle's officers are circulating about his sales of PeopleSoft stock in late 2003. According to the letter, addressed to Oracle CEO Larry Ellison, Oracle representatives are suggesting "there's a great story" behind the sales and urging business reporters to check into them.
The sales were part of his Rule 10b5-1 plan, Duffield said, which has a prearranged schedule for diversifying Duffield's investment portfolio. Once set, Duffield said, he has no control over the sale of the shares, and he adds that Ellison should be acquainted with Rule 10b5-1 plans because he is selling "millions" of Oracle shares through one as well.
Two sales have occurred outside his 10b5-1 plan, he added. They were staged by the Finance Committee of a pet-rescue foundation that Duffield founded called Maddie's Fund. Duffield told Ellison that he doesn't sit on the Finance Committee and isn't consulted on its decisions to sell his shares of PeopleSoft stock.
Duffield provided Ellison with a link to Maddie's Fund in case he wanted to make a contribution.
"If Oracle continues to spread distortions, I will have to consider all appropriate actions, including bringing claim for defamation. I trust you'll make sure the word gets out to [Oracle co-president Safra] Catz and others in your company," Duffield wrote.
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