PeopleSoft's stockholder letter urges Oracle rejection
PeopleSoft's stockholder letter urges Oracle rejection
PeopleSoft CEO Craig Conway has written to the company's shareholders to ask that they reject Oracle's nominations for the company's board of directors and trust the current incumbents to deliver the best returns.
The plea comes less than a week after Oracle sent a mailout to PeopleSoft's shareholders to try to convince them to accept its final tender offer of US$26 per share. In that letter, Oracle claimed that PeopleSoft's directors were acting in their own interests rather than those of its shareholders, and that PeopleSoft's shareholders could demonstrate their disapproval of this by voting for Oracle's nominees at PeopleSoft's forthcoming board elections.
PeopleSoft's letter turns this argument around, saying that it is Oracle that is trying to advance its own agenda by snapping up PeopleSoft on the cheap.
Conway said in the letter that PeopleSoft has delivered outstanding financial results, and that those results have been achieved "despite nearly three quarters of what we believe is Oracle's attempt to disrupt our business and damage your investment in PeopleSoft. The Company has exceeded its revenue and earnings guidance in each of these three quarters - in fact, PeopleSoft has met or exceeded its earnings guidance in 16 out of the last 17 quarters."
He added that Oracle's bid, which represents a premium of around US$4 per share on the current market price, does not reflect PeopleSoft's true value, including the value the company is creating through its recent acquisition of J.D. Edwards. Conway backs this up by asserting that both Goldman Sachs and Citigroup Global markets agree that Oracle's offer undervalues PeopleSoft.
Conway also defended the company's controversial customer assurance program – described by Oracle as a "poison pill" – which has created more than US$1.5 billion in liabilities for whoever acquires the company. The PeopleSoft CEO said this was essential to remove fears among prospective customers that they would lose their investment should the company subsequently be taken over and their products no longer supported.
In conclusion, Conway urged the PeopleSoft shareholders to reject Oracle's nominees for the upcoming board elections and vote for the nominees on the proxy card mailed out by PeopleSoft together with the letter.
"Consider this - when Oracle's paid nominees all agreed to be nominated, Oracle was only offering $19.50 per share for your stock. Oracle now says you should trust Oracle's nominees to look out for your interests.
"Would Oracle's nominees have dismantled PeopleSoft's defences and allowed the Company to be acquired at $19.50 per share?
"Remember, these nominees were picked by Oracle, led by Larry Ellison, who said, "We just look for things that are on sale."
"Your Board of Directors remains focused on doing the right thing for our stockholders. The Board has acted clearly in your best interests, appropriately and diligently reviewing Oracle's inadequate offers. Don't underestimate the significant additional value PeopleSoft can create once the disruption from Oracle's hostile activities has ended."
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