ACADEMIA

PeopleSoft's board was meeting on Sunday to plan its response to Oracle's $5.1bn unsolicited bid, setting the stage for the outbreak of full-scale hostilities as the software group prepares to file its formal offer today. Speaking ahead of a planned conference call of PeopleSoft board members, Craig Conway, chief executive, said he could not prejudge the outcome, though he left little doubt about which way things would go. "There is no combination of terms or conditions that would persuade me to sell PeopleSoft to Oracle," he said. "I think it'll be a pretty short board call." He also savagely attacked the motives of Larry Ellison, Oracle's chairman, questioning his "integrity, honesty and ethics" in launching the surprise raid. However, PeopleSoft cannot formally reject the bid until it has received written details of Oracle's offer. The prospect of a hostile takeover battle in an industry that has never seen a large-scale contested bid points to the severity of the downturn that has hit the enterprise software business. It also reflects the intense rivalry between the two companies in the race to compete with Germany's SAP. Mr Ellison has invested heavily in recent years to break into the market for the applications software large companies use to run their core operations. Mr Conway has moved in the same direction, and last week stole a march on Mr Ellison with an all-stock deal to buy smaller rival JD Edwards for stock now valued at around $2bn. "His proposal is to buy PeopleSoft and kill it," said Mr Conway. "It's done almost out of a sense of panic." Mr Ellison made clear on Friday that his main aim was to get access to PeopleSoft's customers and that he would try to shift these eventually to Oracle products, effectively erasing a rival. Mr Conway also questioned whether Oracle was serious in its offer. At $16, it was pitched at only a 6 per cent premium to PeopleSoft's share price before news of the bid. The company's shares jumped to $17.94 on Friday on an expectation that Mr Ellison would have to raise his offer. "It's classic Oracle, and classic Larry Ellison," said Mr Conway. "It's designed to distract and disrupt the momentum" of the JD Edwards deal, he said. Much is likely to turn in the coming weeks on the practicality of Oracle's proposal to switch PeopleSoft's customers to its own products. Such a move could bring big implementation costs for customers and open the door to SAP's salesforce.