Oracle vs Peoplesoft Case Overview

In June of 2003, PeopleSoft management announced a merger with J.D. Edwards.

Within hours of the announcement, Oracle had launched a hostile takeover attempt
of PeopleSoft. Oracle's bid raised enormously difficult questions for the PeopleSoft
board, questions about whether PeopleSoft products would continue to be
supported and customers became reluctant to buy PeopleSoft software. Managers
were therefore faced with a decision about how to respond to the bid and the
uncertainty it created. To regain customer and analyst confidence, PeopleSoft's
board considered adopting a Customer Assurance Program in which customers
would receive a cash payment in the event of a takeover. This promise of a cash
payment would not only encourage customers to invest in PeopleSoft products, but
also created a liability that might be large enough to derail Oracle's takeover
attempt altogether. The board therefore had to consider the implications of a
Customer Assurance Program for the welfare of the firm, its customers, and its
duties to shareholders faced with a tender offer.