NEW YORK (CNN/Money) -
PeopleSoft, which is the subject of a hostile takeover bid from rival software company Oracle, filed a lawsuit against Oracle in a California county court on Friday.
In a written statement, PeopleSoft alleged that Oracle engaged in unfair business practices, trade libel and tortious interference with PeopleSoft's customer relationships. PeopleSoft said it is seeking to block Oracle from bringing its $16-a-share cash offer to PeopleSoft shareholders.
PeopleSoft described Oracle's offer as "a sham tender offer aimed at destroying PeopleSoft's business." Oracle has said that if its bid for PeopleSoft is successful, the company intends to stop selling PeopleSoft products and try and switch customers to Oracle's software.
"By making an offer with the acknowledged intent of eliminating PeopleSoft's business, Oracle seeks to disrupt PeopleSoft's efforts to complete new sales, thus, effectively damaging PeopleSoft's business even if Oracle never buys a single share of PeopleSoft stock," PeopleSoft CEO Craig Conway said in the statement.
The suit came one day after PeopleSoft rejected Oracle's unsolicited $5.1 billion bid, first announced a week ago. Another software company, J.D. Edwards (JDEC: Research, Estimates), which PeopleSoft agreed to acquire on June 2, also filed two lawsuits against Oracle on Thursday, one in J.D. Edwards' home state of Colorado and the other in California.
PeopleSoft's decision to take this battle to the courts is a departure from what was expected. earlier in the week. On Tuesday, Oracle said that PeopleSoft withdrew planned legal action and expressed hope that this meant PeopleSoft would be willing to discuss the offer.
Oracle (ORCL: Research, Estimates) reaffirmed its interest in PeopleSoft during its fiscal fourth-quarter earnings conference call on Thursday. The company could not immediately be reached on Friday.
Shares of PeopleSoft (PSFT: Research, Estimates) fell 2.6 percent to $16.92 on Friday and are now trading just 5.8 percent above Oracle's offering price.
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