Oracle announced late on Tuesday that 75 percent of PeopleSoft investors have tendered their shares, giving it a controlling stake in the company but falling short of the level needed for a speedy close to the deal.
As a result, Oracle has extended the tender deadline to 5 p.m. (PST) on 4 January, 2005, at which time it hopes to receive 90 percent or more of PeopleSoft shares -- thus avoiding the need to hold a special shareholder vote on the merger, which could delay the deal's close by four to six weeks. Although the $10.3bn mega-deal may face a delay in its closing by roughly a month, the deal will ultimately pass given that Oracle holds a majority stake in PeopleSoft and has four representatives to PeopleSoft's board of directors who took effect on Tuesday night.
"We are quite confident we'll have the 90 percent needed by the 4 January deadline. Some large shareholders wanted to wait until the first of the year to defer tax consequences," an Oracle spokesman said.
Oracle, which had set a Tuesday deadline for PeopleSoft investors to tender their shares when it announced its $10.3bn cash merger agreement with PeopleSoft earlier this month, also announced four representatives to PeopleSoft's board. They will replace four PeopleSoft directors who resigned on Tuesday night, following the initial tender deadline. Two PeopleSoft directors, however, will continue to serve on the board until the merger is completed.
PeopleSoft founder and CEO Dave Duffield, however, chose not to wait until the results of the initial tender offer were known before he resigned. Duffield resigned as chief executive and chairman on 21 December. Neither PeopleSoft nor Oracle would comment on Duffield's departure.
Meanwhile, PeopleSoft investors will have to formally vote on the merger if fewer than 90 percent of the outstanding PeopleSoft shares are tendered by 4 January, 2005, proxy solicitors said.
Oracle's spokesman noted that if 90 percent of the shares are not tendered by the January deadline, the deal's close would be pushed out by four to six weeks. Oracle had previous said it expected the deal to close sometime in January.
Oracle, as part of its $10.3bn cash offer, will pay investors $26.50 per share, as part of the merger deal. Once Oracle receives shareholder approval, it will bring to a close the 18-month, contentious, hostile takeover battle, which only recently became a friendly deal.
Just last month, more than 60 percent of PeopleSoft investors tendered their shares in support of the deal, but PeopleSoft's board reiterated its rejection of Oracle's $24 a share bid.
As a result, Oracle was not able to take possession of the shares without triggering PeopleSoft's anti-takeover measures, otherwise known as a poison pill. Once Oracle raised its offer to $26.50 a share, the transaction turned friendly and prompted PeopleSoft's board to waive the poison pill.
