The news came as PeopleSoft revealed that Oracle could be liable for up to $354m in refunds if the acquisition is successful and Oracle discontinues PeopleSoft products, as the result of a cunning poison pill sales plan.

Oracle said yesterday that approximately 34.8 million PeopleSoft shares have been tendered as a result of its offer, which works out at about 11% of PeopleSoft’s 316.6 million outstanding shares. Oracle is offering about $6.3bn, $19.50 per share.

The underwhelming response to Oracle’s tender offer is consistent with the PeopleSoft board’s conclusion that Oracle’s offer undervalues the company and involves unacceptable risks, PeopleSoft said in a statement.

The likelihood of Oracle succeeding in its bid on its original terms is looking slimmer with every passing day. PeopleSoft’s acquisition of JD Edwards & Co is looking more likely, and a PeopleSoft sales initiative could reduce Oracle’s post-merger flexibility.

Shortly after Oracle announced its bid last month, PeopleSoft started offering potential customers refund guarantees, valued at two to five times the license fee, that would be triggered if a company bought PeopleSoft and discontinued its products.

The company said yesterday it believed the tactic encouraged customers to go forward with business arrangements despite uncertainty about the future of PeopleSoft applications in the marketplace that Oracle’s actions created.

Following the announcement of its preliminary second-quarter financial results on Wednesday, PeopleSoft said in a regulatory filing yesterday that the total amount Oracle could wind up owing is $354m.

But neither company appears to believe that the money would become due. Oracle says it intends to support the products if the merger closes, and PeopleSoft said it believes the likelihood of the customer protection program being exercised not to be probable.

It could be moot. Oracle faces regulatory hurdles already, which could be intensified if it is forced to also acquire the JD Edwards business. It would essentially be taking another company off the market, albeit one with a slightly different customer base.

Source: Computerwire