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Office of the Chancellor / Public Affairs
Thursday, August 14, 2003
 

Contra Costa Times 8-14-03

PeopleSoft expands Oracle suit
By Jessica Guynn and Ellen Lee

 

PeopleSoft Inc. on Tuesday expanded its lawsuit to block Oracle Corp.'s $7.3 billion hostile takeover bid, alleging it has "extensive new facts" about Oracle's efforts to scuttle PeopleSoft's merger with J.D. Edwards & Co., mislead and poach its customers, and sabotage its business.

PeopleSoft said it amended its original lawsuit filed in June in Alameda County Superior Court to detail what it called Oracle's sham takeover bid designed to "cripple PeopleSoft's ability to sell its software."

It also alleges that Oracle's public statements about PeopleSoft's merger with J.D. Edwards were intended to scare off potential customers.

"There were deals we weren't able to close. There were deals that went to competitors because of the uncertainty that was raised," said PeopleSoft spokesman Steve Swasey. "Customers still have questions and concerns. It's still present in the marketplace."

Oracle's attempts to disrupt PeopleSoft's business resulted in at least $170 million in delayed or canceled contracts in the second quarter, the suit alleges. Continued statements from Oracle that it intends to buy PeopleSoft threaten "ongoing harm" to PeopleSoft's ability to close deals, the Pleasanton software maker contends.

Portions of the amended complaint have been filed with the court under seal because Oracle marked internal documents confidential when handing them over to PeopleSoft, according to the lawsuit.

Four days after PeopleSoft announced it would buy smaller software rival J.D. Edwards, Redwood City-based Oracle counterpunched with a surprise hostile bid for PeopleSoft. The $1.8 billion merger with J.D. Edwards vaults PeopleSoft over Oracle into the No. 2 position behind German software giant SAP AG in the multibillion-dollar business software market. PeopleSoft said it has consolidated its lawsuit with another one J.D. Edwards filed against Oracle.

"It would be inappropriate for us to comment without having seen the filing," Oracle spokesman Jim Finn said in a statement. "We were aware they were going to file an amended complaint, so we are not surprised, and it does not change our commitment to acquire PeopleSoft."

PeopleSoft says Oracle has no intention of buying PeopleSoft but instead has engaged in a "concerted campaign to ensure maximum damage to PeopleSoft's business and wreck PeopleSoft's financial results."

New information shows that Oracle undertook a "campaign of disinformation" to deliberately mislead and alarm PeopleSoft customers, the suit claims. Minutes after -- and in some cases before -- launching the surprise bid, Oracle told PeopleSoft customers that it planned to "retire" PeopleSoft's products used by 5,100 corporate customers, PeopleSoft alleges.

In an e-mail sent to Oracle employees, Oracle's chief financial officer urged Oracle employees to contact PeopleSoft customers and help Oracle executives target "senior management at key customers around the world," according to the suit.

Oracle told PeopleSoft customers that switching to its products would be easy and "graceful," but PeopleSoft claims that promise is "directly contrary" to Oracle's internal assessment. Oracle also worked behind the scenes to influence industry analysts to advise their clients to delay buying PeopleSoft software, the suit alleges.

A vice president of an Oracle subsidiary reportedly sent an analyst report to a PeopleSoft customer that warned Oracle "will not support any PeopleSoft products in the long term" and advised PeopleSoft customers to breach their contracts. PeopleSoft alleges that Oracle "widely disseminated" the report to PeopleSoft customers.

The lawsuit also cites an e-mail from Siebel Systems Chief Executive Tom Siebel: "It appears that Oracle will end-of-life the PeopleSoft product line. ... I should think that many customers and prospects would find this a matter of some concern."

The Department of Justice is probing Oracle's proposed plan to take over PeopleSoft. Oracle's lawsuit against PeopleSoft, asking that the court force PeopleSoft to drop its takeover defenses and negotiate with Oracle, is still pending in Delaware. A hearing is scheduled in mid-September.