erpSOURCING Central - Users Still Victims of Oracle/PeopleSoft Saga

Embattled ERP software vendor PeopleSoft Inc. last week refused to capitulate in its long-running battle with potential purchaser Oracle Corp., despite the apparent will of a majority of shareholders, keeping corporate users in limbo.

Pleasanton, Calif.-based PeopleSoft's board called on Oracle to raise its bid as Oracle appealed to PeopleSoft directors to lift their strong poison-pill anti-takeover mechanisms, which would likely make the deal unreasonably expensive for Oracle. A judge in a Delaware court has agreed to hear arguments in the case Dec. 13. While the fate of the merger is still uncertain, recent events don't bode well for PeopleSoft users, who have struggled with the situation for months. "What this means to customers is increased uncertainty caused by more legal wrangling," said John Matelski, deputy CIO for the City of Orlando, a PeopleSoft shop. "I'm comfortable with the products and services that PeopleSoft provides, and thus I remain hopeful that a merger/acquisition does not occur. Regardless of what the result is, it's in all parties' best interest that a rapid resolution occur." John Schindler, CIO at lighting fixtures maker Kichler Lighting Group, a PeopleSoft shop in Cleveland, said, "Having now worked with Oracle E-Business applications as well as PeopleSoft in my career, I'm as committed as ever to the quality and lower cost of ownership that PeopleSoft provides Kichler." He noted that the takeover effort is by no means over, as the proxy and poison-pill battles continue. "Selfishly, I want PeopleSoft to survive as an independent company," Schindler said. "I believe Oracle is trying to buy a customer list and will ultimately kill off the PeopleSoft applications. I'm hopeful that this will die during the poison-pill phase." PeopleSoft's board declined to accept Oracle's so-called best and final offer of $24 per share, or $9.2 billion, despite Oracle's claims that 60% of PeopleSoft stockholders tendered their shares in favor of the sale prior to its deadline of Nov. 19. Oracle called the shareholder vote a "mandate" for approval of its hostile bid to buy its competitor. "We believe it is time to bring this matter to a close, for the good of PeopleSoft's shareholders, customers and employees," said Oracle Chairman Jeff Henley as the votes were tallied. But PeopleSoft's board has refused to budge and has retained the poison-pill mechanisms. A. George Battle, chairman of the PeopleSoft board's transaction committee, said in a statement issued after the vote that "we would be willing to discuss an offer made by Oracle at an appropriate price -- but $24 is not that price." At that point, Oracle responded that the two companies were "obviously at an impasse." Oracle's board had urged PeopleSoft to sell without having to shift the takeover fight to a Delaware court, which could force PeopleSoft to lift the poison-pill provisions, or to the shareholders via a proxy battle, which would take place next spring. Although it looks like it will come down to a proxy fight, "this deal just moved one more significant step toward closing in Oracle's favor," said Joshua Greenbaum, an analyst at Enterprise Applications Consulting in Berkeley, Calif. Many users just want the two vendors to work out their differences, no matter what the result. Gary Riley, a business systems analyst at Matanuska Telephone Association Inc., a PeopleSoft World shop in Palmer, Alaska, said, "If they are just fighting for the best dollar-per-share figure, they should be sitting down at the table with Oracle."