Oracle Launches Legal Attack on PeopleSoft's Takeover Defenses

October 4, 2004 ( - Oracle Corp. has launched its legal attack on PeopleSoft Inc.'s takeover defenses, claiming, that among other things, the former CEO mislead securities analysts about customer reactions to a June, 2003 tender offer by Oracle.

Although Oracle claims that PeopleSoft may have acted improperly regarding the takeover bid, the first day of trial focused on statements made by recently-ousted CEO Craig Conway regarding the effects of the tender offer, the Wall Street Journal reported. On the stand Monday, PeopleSoft director Steven Goldby admitted that Conway misspoke in telling analysts that the Oracle takeover no longer had an effect on PeopleSoft’s ability to write new business. He denied the statements were lies, however. The comments were made in September of last year at an analyst conference.

Conway has admitted that he was untruthful when he told analysts that the effects of the takeover attempt were shrinking. On the stand, Goldby denied that this was the sole reason for Conway’s dismissal late last week. However, he did state that most of the board learned of Conway’s admittance of misrepresentation the week before his dismissal.

Also expected to be attacked at trial are PeopleSoft’s other takeover defense tactics. These include a special money-back-guarantee customer program that could add as much as $2 billion in liability to the acquisition, as well as the software maker’s antitrust campaign.

On Friday, the US Justice Department dropped its antitrust challenge to the proposed merger after suffering a defeat in a Californian federal court.

Conway was dismissed from his role of CEO on Friday, with the board members stating that they had had a “loss of confidence in Mr. Conway’s ability to continue to lead the company,” (See  Takeover Target PeopleSoft Announces Exec Reshuffle ).