PeopleSoft spurns Oracle's advances

PeopleSoft has formally rejected Oracle's acquisition offer, claiming the offer is bad for customers, stockholders and likely to be bogged down by red tape.

Oracle last week offered $5.1bn (£3m) to buy outstanding shares to take over its rival, saying that it would discontinue development of PeopleSoft's software.

That decision would mean the deal would face scrutiny from anti-competitive regulators in Europe and the US, said PeopleSoft.

"We believe that Oracle's proposed acquisition of PeopleSoft would stifle competition and limit customer choice," said Craig Conway (pictured), PeopleSoft president, in a statement.

The current offer "significantly" undervalues the company, PeopleSoft added, and the prospect of regulatory scrutiny would add to customer uncertainty.

PeopleSoft has been keen to suggest that Oracle's audacious bid comes from trying to unsettle its own plans to acquire mid-market rivals JD Edwards. But Oracle chose to offer cash in order to secure a quick deal.

PeopleSoft's shareholders will make the final decision. Even if they accept that the current offer is not enough, they may want to see if Oracle is prepared to raise its bid.