PeopleSoft Says ''No'' Again

Once again, PeopleSoft has rejected a buyout offer from Oracle. Once again, Oracle says PeopleSoft has just one more chance. And once again, the real story may be far more complex. In what the company says was a unanimous decision, PeopleSoft's directors turned down an offer from Oracle to buy the company for $24 per share, saying that the price was not right. Oracle had offered as much as $26 per share previously, but that offer was withdrawn before the company replaced CEO Craig Conway with founder Dave Duffield, more than a month ago. The latest rejection spurred a statement from Oracle indicating that the final date for acceptance would be November 19, but this dance has been done in public more than once. "It's a tough call, but I doubt that it would be the end," says Donovan Gow, vice president of equity research at American Technology Research. "Oracle is using stronger language than they had in the past, but they certainly misled the public before with their statements and have extended several times previously, and directionally on where the price goes...so you need to take anything they say publicly with a large grain of salt." In the wake of Duffield's resumption of CEO duties PeopleSoft has in particular stepped up its efforts to communicate new product launches and customer wins to the public. The company has also projected aggressive earnings figures to investors during this time. Those moves mean little, however, as indicators of PeopleSoft's true intentions: They could be used to indicate plans for a strong, independent future, or simply act as a bargaining chip to show that the company deserves a higher price tag. Gow says that the choice in leadership tends to indicate plans to stay the course. "[Duffield] is not a guy you would bring back to sell the company or complete a transaction. His forte is long-thinking and customer relations." Institutional investors like mutual funds and retirement plans comprise the vast majority of PeopleSoft investors, so their collective decisions will ultimately determine the fate of the buyout offer. As of late last month Oracle had only secured the approval of roughly 5 percent of shareholders. If the PeopleSoft acquisition ultimately proves fruitless, Oracle is expected to attempt to acquire other competitors. Gow says that Ellison is indicating he has the money to do so: "Ellison is saying, 'Look, if you want a much higher bid price, I can go out and buy other companies. There are better uses for that money.' " Related articles: PeopleSoft Warming To Oracle's Offer? PeopleSoft Founder and Chairman Duffield Replaces Conway as CEO