Oracle Corp could know within a month whether the European Commission plans to block its takeover of PeopleSoft Inc on antitrust grounds, the company learned yesterday, as talk escalated that the $7.7 billion bid could be increased.
During the Delaware court trial in which Oracle is trying to get PeopleSoft’s poison pill measures overturned, Oracle director Joseph Grundfest reportedly testified that Oracle is prepared to raise its bid, which, at $21 per share, is a discount on the market price.
Speculation mounted that Oracle was ready to increase the offer, which was due to expire tonight, but after the markets closed the company extended the offer of $21 per share for two weeks. It will now expire October 22, after the markets close.
Oracle disclosed that PeopleSoft shareholders have tendered about 11 million shares and not withdrawn them. That’s about 3% of PeopleSoft’s outstanding shares, half the amount that had been tendered two weeks ago.
But the fourth day of testimony in the Oracle-PeopleSoft case did little to dispel the increasing impression that a merger of the two companies is more likely to go ahead, possibly even on a friendly basis.
Following the decision of the US Department of Justice last week not to appeal its antitrust litigation loss and the subsequent firing of PeopleSoft CEO Craig Conway, the hurdles to the acquisition are quickly dropping.
Testimony on Tuesday suggested that PeopleSoft’s board would be open to a friendly merger at the right price and speed, and on Wednesday Oracle attorneys painted Conway as a man who would fight the takeover at any cost.
If Oracle persuades the Chancery Court in Wilmington, Delaware, that PeopleSoft’s shareholder rights plan and Customer Assurance Program should be rescinded, then its only major obstacle is the European Commission.
The Commission updated its web site yesterday to reflect a deadline of November 9 for its ruling on whether the deal represents a competition concern. The Commission is believed to have been waiting for the outcome of the Oracle-DoJ case.
Some reports yesterday suggested that the decision may come earlier, before competition commissioner Mario Monti, known for irking US interests by blocking deals already approved by American regulators, leaves the office on October 31.
A year ago, the Commission said that the merger merits further analysis especially as the number of key players would be reduced from three to two – Oracle and SAP – in certain applications software markets.
Given that SAP is German, and that the EC is accused of adopting a protectionist strategy even when its decisions aid American interests (the recent Microsoft antitrust decision, for example, helps RealNetworks and Sun more than any European firm), one can only guess what kind of outcry a block of the Oracle-PeopleSoft deal would provoke.