SAN FRANCISCO - Business software maker PeopleSoft Inc. rejected rival Oracle Corp.'s $5.1-billion hostile takeover bid Thursday in a move likely to force the company's unwelcome suitor to sweeten its offer or walk away from the proposed deal.
Meanwhile, J.D. Edwards & Co., which agreed to be bought by PeopleSoft last week, filed a lawsuit seeking $1.7-billion from Oracle, saying the company is interfering with the proposed purchase.
J.D. Edwards is asking for an order requiring Oracle to call off its bid for PeopleSoft in a lawsuit filed in state court in Denver. The company also sued Oracle, its chief executive Larry Ellison and Chuck Phillips, a former Morgan Stanley analyst who last month joined Oracle, in state court in San Francisco.
Oracle said the lawsuits have no merit.
"Clearly PeopleSoft and J.D. Edwards prefer to fight in the courts than let shareholders decide," Oracle spokesman Jim Finn said.
The unanimous rejection of Oracle's offer by PeopleSoft's board didn't come as a surprise, given that its chief executive Craig Conway recoiled from Oracle's unsolicited $16-per-share offer almost as soon as it was made last week.
Conway, a former Oracle executive, reiterated his contempt for the bid Thursday in a statement that described the offer as an attempt "to enrich Oracle at the expense of PeopleSoft's stockholders, customers and employees."
If it acquires PeopleSoft, Oracle intends to lay off thousands of employees to boost profits and phase out PeopleSoft's software, which helps companies run their personnel departments and other behind-the-scenes operations.
Oracle accused Conway of trying to kill the bid even before PeopleSoft's board had a chance to consider it.
"Oracle is disappointed the PeopleSoft board has put the self-interest of management over the best interests of PeopleSoft shareholders," Finn said.
J.D. Edwards said it filed the lawsuits to protect customers. "It certainly creates an antitrust concern because you're wiping out a competitor and keeping choice away from customers," said chief executive Bob Dutkowsky.
Separately, Oracle said it earned $858-million, or 16 cents per share, in the quarter ended May 31, a 31 percent improvement from net income of $656-million, or 12 cents per share, from the same time last year. The results exceeded the consensus estimate of 14 cents per share among analysts polled by Thomson First Call.
Revenue totaled $2.83-billion, up from $2.77-billion a year earlier.
- Information from Bloomberg News Service was used in this story.
