PeopleSoft antimerger provision lapses

PeopleSoft has allowed a customer assurance programme - which offered rebates in the event of a hostile takeover - to expire.

PeopleSoft has allowed a customer assurance programme - which offered rebates in the event of a hostile takeover - to expire.

Spokesman Steve Swasey confirmed that the company's board has, at least temporarily, let the programme expire, which it established as a way to fend off Oracle's unwanted takeover bid.

Oracle has been trying to buy PeopleSoft since last summer in a multibillion-dollar deal, but it now faces a number of objections on antitrust grounds by the European Union and the US Department of Justice. 

Swasey said the programme, which comes up for renewal each quarter, was allowed to lapse on 31 March. The programme had offered refunds of two to five times the value of a customer's contracts should a merger take place and the purchasing company ceases to enhance PeopleSoft's software. Oracle at one point denounced the move as an "unsustainable gimmick to close deals". 

As of the end of the fourth quarter of 2003, the programme had created $1.5bn worth of potential liability. 

Swasey declined to divulge how many customers had opted to join the programme, but said that "it was not a driver of sales by any means". Rather, customers saw it as a "nice-to-have element for something that was already strongly appealing, like fire insurance for a house".

It is up to PeopleSoft's board to decide whether to extend the offer in the future, said Swasey, who declined to say when the board would meet next. 

He also indicated that the Oracle takeover now seems unlikely. "How many government and official agencies does it take [to block the merger]?" he asked. "The regulators have spoken."

Marc L Songini writes for Computerworld

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