Adding to the cloud of uncertainty that has always swirled around Oracle's hostile bid for control of PeopleSoft, two major shareholders have reached opposite conclusions on how to cast their votes on Oracle's buyout offer.
Investment firm Private Capital Management said it did not support Oracle's offer, but Oracle countered with the news that institutional investor Capital Guardian Trust has decided it will.
Private Capital controls 9.3% of PeopleSoft shares while Capital Guardian has 5.9%, although the latter's holding company owns another 4.3% through other funds. A Capital Group spokesman refused to comment on how its sister funds would vote or to confirm Capital Guardian's voting intentions.
Most investors are likely to wait until the last minute to tender shares into Oracle's offer, even if they have already made their decisions. Oracle has given PeopleSoft shareholders until Friday midnight to accept its $24 (£13) per share cash offer. If most PeopleSoft shares are not tendered by the deadline, Oracle says it will drop its 16-month campaign to buy PeopleSoft.
PeopleSoft, whose board opposes the deal, has a head start in gathering the support it needs to keep the shares tendered to Oracle below the 50% threshold. Company founder David Duffield, who returned as chief executive last month when PeopleSoft's board ousted Craig Conway, has a shareholding estimated at more than 7%. PeopleSoft insiders control another 10%.
Private Capital said it had "significant concerns" about whether Oracle's bid represented a better return for shareholders than PeopleSoft would be able to generate as an independent company.
Oracle and PeopleSoft executives are on the road this week lobbying key institutional investors. Oracle president Safra Catz and chief finance officer Henry You shredded PeopleSoft's prospects and cast aspersions on its board's honesty at a shareholder presentation this week.
PeopleSoft's acquisition of JD Edwards "was the failure we expected it to be", said Catz. She doubted whether PeopleSoft could live up to its board's earnings projections for 2005.
You said that Oracle would move on to other targets on its list of potential acquisitions (which he declined to name) if the PeopleSoft offer failed. "PeopleSoft is strategically important to Oracle but it is not critical," he said. "$24 is our point of strategic indifference."
Stacy Cowley writes for IDG News Service