November 24, 2004 6:05 PM PST

Oracle reveals challengers for PeopleSoft's board

Oracle on Wednesday announced its opposing slate of PeopleSoft directors, as the enterprise software maker turns the protracted takeover battle into a proxy fight.

Oracle put forth a list of four candidates to run against PeopleSoft's incumbent directors who will be up for re-election at next year's annual shareholders meeting. Should Oracle prevail in the proxy fight, its slate would control the company, as PeopleSoft reduced the size of its board to seven members from eight last month.

"We have notified the PeopleSoft board of our intention to run an alternative slate of directors at the 2005 annual meeting," Jeff Henley, Oracle's chairman, said in a statement. "We believe that the current board of PeopleSoft is not acting in the best interests of stockholders and that a large majority of those stockholders are in favor of a change."

Oracle turned to the same group of candidates it previously named last year, when it was gearing up for a proxy battle. Oracle, however, later withdrew its slate of dissident directors, after federal antitrust regulators filed a lawsuit to block the proposed deal.


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Oracle's opposition slates includes Duke Bristow, director of the University of California at Los Angeles' Anderson School of Management training and certification program; Artur Raviv, finance professor at the Kellogg School of Management at Northwestern University; Laurence Paul, managing principal at Laurel Crown Capital; and Roger Noall, former chief administration officer of bank holding company KeyCorp.

They will be vying for board seats currently held by PeopleSoft Chairman and Chief Executive David Duffield, Vice Chairman Aneel Bhusri, and independent directors Steven Goldby and Michael Maples.

PeopleSoft opted to reduce the size of its board last month, after firing Chief Executive Officer Craig Conway. PeopleSoft faced the choice of either appointing a new director to fill Conway's board seat and putting that person up for election at the next annual shareholders meeting, or reducing the size of the board.

Redwood Shores, Calif.-based Oracle hopes its slate of directors will be elected so it can remove PeopleSoft's anti-takeover measure, otherwise known as a poison pill. If triggered, the poison pill will flood the market with PeopleSoft shares, making it cost prohibitive to acquire the Pleasanton, Calif.-based company.

Oracle has made "best and final" cash offer of $24 a share on the table, making the deal worth $9.2 billion.

PeopleSoft investors can expect aggressive lobbying from both companies in the coming months leading up to the shareholders meeting, as each side attempts to have investors sign their proxy cards in favor of their respective board candidates.

Oracle recently gained support among PeopleSoft investors for its tender offer. Last Friday, Oracle set a deadline for PeopleSoft investors to tender their shares. The enterprise software maker said it needed investors to tender at least 50 percent of all outstanding shares, otherwise it would walk away from the deal.

Oracle received 61 percent of outstanding shares. The software maker, which did not draw down the tendered shares for fear of triggering the poison pill, later set a new deadline of Dec. 31 for tendering shares.

Despite capturing support from a majority of PeopleSoft investors, PeopleSoft's directors later reiterated their rejection of Oracle's final offer.

"On November 10th the PeopleSoft board of directors rejected Oracle's tender offer stating that they believed PeopleSoft is worth substantially more than Oracle's $24 per share offer," PeopleSoft said in a statement. "Oracle's only response has been to repeatedly state that its $24 offer is 'best and final.'"

PeopleSoft added that, based on a number of conversations it has had with its largest shareholders, the company's board is "convinced" that a majority of its investors find the $24 per share offer substantially undervalues PeopleSoft.

"We believe that Oracle has nominated this slate to allow Oracle to purchase PeopleSoft for an inadequate price that does not reflect the company's real value," PeopleSoft stated. "We entered the fourth quarter with a robust pipeline and a solid plan that positions us for sustained growth in 2005 and beyond. We are a vibrant, strong company with a focused, motivated management team and employee base dedicated to executing on the company's plan."

Oracle, however, has a different view.

"Though a large majority of the stockholders have already indicated their desire to sell, the current board appears intent on obstructing the will of the stockholders," Henley said. "We plan to give them a choice."

Last year, PeopleSoft held its annual shareholders meeting in March. No date has yet been set for next year's meeting.

 

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