WILMINGTON, Del. – Oracle Corp. (ORCL) director Joseph Grundfest told a Delaware court Thursday that the offer of $21 per share now on the table in the company's attempt to buy PeopleSoft Inc. (PSFT) may not be Oracle's final offer.
Grundfest said Oracle's board has evaluated whether to extend the current tender offer, but asked to consult with counsel when asked what the board had decided.
The Oracle (search) attorney who had posed the question withdrew it, but asked again if people should assume the current price is the last one PeopleSoft will see.
"No," said Grundfest.
Oracle is trying to convince a Delaware Chancery Court to remove two antitakeover defenses that PeopleSoft (search) has employed to stop Oracle's $7.7 billion hostile takeover bid. PeopleSoft is fighting to preserve them during the two-week trial.
Redwood Shores, Calif.-based Oracle launched its bid for Pleasanton, Calif.-based PeopleSoft 16 months ago.
The Oracle director's comments came at the close of his testimony in the fourth day of the trial.
A professor of law at Stanford University, Grundfest ducked a question on whether PeopleSoft shareholders should expect the price to move up or down.
"We haven't said anything publicly about that," he said.
On the stand, he recounted the deliberations that saw the June 2003 offer of $16 per share rise first to $19.50 per share and then to $26 as Oracle battled to overcome fierce resistance from PeopleSoft.
Until last week, the threat of U.S. antitrust action was also a factor in the takeover play, as Oracle repeatedly extended its offer. The U.S. Department of Justice last week dropped its antitrust challenge to the combination, after losing a court bid to stop the deal.
In answer to questions from the Delaware judge on Thursday, Grundfest said an Oracle acquisition of PeopleSoft could result in a forced migration of the acquired company's customers to Oracle's database after 10 years.
While Oracle has pledged to preserve support for PeopleSoft applications for a decade, the business plan calls for a single applications product line, an area where PeopleSoft and Oracle now compete, Strine pointed out.
Since Oracle's applications work only with its own database products, PeopleSoft applications customers who now use other databases may be forced to move to Oracle's database over time, if they want to continue using applications from the PeopleSoft line, the judge said.
Grundfest said the judge's recitation reflected his understanding of the future plan, but that others at Oracle may have a clearer view.
Oracle has said in court papers that it will abide by a promise to support, enhance and add new functionality to PeopleSoft products for 10 years.
Evidence produced Thursday showed that Oracle senior managers told its sales force to tell customers there was a low probability that an Oracle acquisition would trip triggers on PeopleSoft's customer program, forcing them to return money to unhappy PeopleSoft customers.
Grundfest said on the stand Wednesday, however, that the special customer program adds great risk to the deal, since what is now a $2 billion liability — money Oracle might have to return to unhappy PeopleSoft customers — could grow enormously.
"The very ability to do the transaction becomes more and more problematic with every passing day because of the growing size, the mushrooming potential size of the risk that we have to address here," the Oracle director said.