PeopleSoft Rejects Revised Oracle Offer.

In a move that will come as a surprise to no one, PeopleSoft Inc has formally rejected the revised offer from Oracle Corp to purchase all of its shares and merge the PeopleSoft business in its entirety into Oracle.

PeopleSoft reported that following careful consideration and acting on the recommendation of a committee of independent directors, the board of directors had voted unanimously to recommend that PeopleSoft stockholders reject Oracle's $19.50 cash offer.

On June 6, Oracle offered PeopleSoft stockholders $16 per share, which PeopleSoft also recommended its stockholders to reject, but increased the bid to $19.50 per share last week.

The PeopleSoft board maintained its previous stance that the offer was not in the best interests of the company's stockholders and that the merger would face lengthy regulatory delays and would probably be prohibited.

It added to these previously stated objections and said that the board believes the $19.50 offer "undervalues the company based on its financial performance and significant future opportunities including the value created through the acquisition of JD Edwards."

In what may be wishful thinking, Craig Conway, PeopleSoft's President and CEO said that board had identified additional risk to stockholders from the offer "because it is highly conditional and Oracle could withdraw it at any time."

While it was thought that Oracle's initial bid might have been made primarily in order to disrupt PeopleSoft and JD Edwards' merger and their respective sales operations, the revised bid confirmed how serious it was.

The three parties are engaged in a race to see who can take their offer to completion first. PeopleSoft amended its all-share offer to acquire JD Edwards to a part cash/part stock offer, removed the requirement for a shareholder vote, and started the exchange offer for JD Edwards' share last Thursday. Meanwhile, Oracle launched a legal bid to prevent the JD Edwards acquisition proceeding.