PeopleSoft wins poison-pill reprieve

Oracle's efforts to remove PeopleSoft's anti-takeover measures via a court order will spill over into December, a Delaware Chancery Court judge decided on Wednesday.

Vice chancellor Leo Strine indicated he wants further details on Oracle's revised takeover offer and, particularly, why PeopleSoft's board rejected its competitor's unconditional $24-a-share offer, according to reports in the Associated Press and Dow Jones.

Strine called for a new hearing on 13 and 14 December to review the matter and take in new evidence, as well as to consider Oracle's request to prevent the application of PeopleSoft's shareholder rights plan, otherwise known as a poison pill.

Oracle and PeopleSoft previously argued their positions in October during a two-week trial in the Delaware Chancery Court. At the conclusion of the trial, which largely focused on the previous considerations the companies gave to the merger and PeopleSoft's customer assurance guarantee programme, Strine said he would meet with the parties in late November to further discuss whether more hearing dates would be necessary to review PeopleSoft's poison pill.

The Delaware Chancery Court, historically, has been reluctant to remove a company's poison pill, which floods the market with additional shares and makes a hostile takeover cost-prohibitive.

Strine also refused to approve a settlement reached in May between PeopleSoft and a group of shareholders who sued over the customer assurance programme.

The programme, now in its sixth version after several rounds of changes, pledges rebates of two to five times the cost of PeopleSoft software if Oracle acquires the company and then lets customer service drop below certain standards.

The settlement would have dismissed all claims against PeopleSoft in exchange for the programme only being implemented if Oracle acquired it. In rejecting the deal, Strine expressed concern that it released PeopleSoft from too wide a swath of damages and federal securities claims.

"I really don't understand this to be that valuable a benefit" for shareholders, said Strine, who questioned lawyers over whether the settlement released PeopleSoft's directors or former chief executive Craig Conway from claims parties might choose to file against them.

Strine said he was particularly troubled by the notion that the settlement could have given PeopleSoft reprieve from federal securities claims.

Another new issue that cropped up after that trial concluded was the decision by the European Commission not to block Oracle's takeover bid. Previously, PeopleSoft had said one of the reasons it rejected Oracle's takeover bid was that it would violate antitrust laws. The European Commission's decision removed the last regulatory hurdle to the deal.

Meanwhile, Oracle announced last week the results of its tender offer: PeopleSoft shareholders, representing 61 percent of shares, voted to tender at the $24-per-share bid. Oracle has since extended the tender deadline to 31 December.

Dawn Kawamoto writes for CNET News.com. Reuters contributed to this report.