PeopleSoft Exec Defends Rebate Program
PeopleSoft Inc. co-President Kevin Parker on Wednesday denied that his company’s customer-rebate plan is an illegal defense designed to thwart Oracle Corp.’s hostile $7.7-billion takeover bid by making the offer too expensive.
The rebate program is designed to protect customers who are concerned that Oracle might cut product support if it buys PeopleSoft, Parker testified in Wilmington, Del., during the eighth day of a trial to determine whether PeopleSoft has illegal anti-takeover defenses, including a stock-diluting “poison pill.”
“It is an economic incentive” for customers, not a defensive measure, said Parker, who is also the company’s chief financial officer. He was named a co-president with W. Phillip Wilmington after PeopleSoft fired chief executive Craig Conway on Oct. 1.
Oracle -- the third-largest business software maker behind No. 2 PeopleSoft and No. 1 SAP of Germany -- sued PeopleSoft last year, contending that it had unlawful anti-takeover defenses. Redwood City, Calif.-based Oracle has made four offers to buy PeopleSoft since June 2003, the most recent at $21 a share.
PeopleSoft’s poison-pill defense would flood the market with low-cost stock. Its “customer assurance program” promises rebates of as much as five times licensing fees if Oracle cuts product support. PeopleSoft said the rebates carried a cost of $2.02 billion as of June 30.
Either defense would make the buyout prohibitively expensive, Oracle has argued.
Shares of Pleasanton, Calif.-based PeopleSoft fell 11 cents to $21.46 and Oracle’s shares fell 16 cents to $11.99, both on Nasdaq.
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