PeopleSoft opens way for Oracle bid by firing chief

PeopleSoft, THE software company under siege from a hostile $7.7bn (£4.3bn) bid by its larger rival Oracle, yesterday sacked its chief executive, Craig Conway, increasing the likelihood that the California-based company would give up its 16-month fight for independence.

PeopleSoft, THE software company under siege from a hostile $7.7bn (£4.3bn) bid by its larger rival Oracle, yesterday sacked its chief executive, Craig Conway, increasing the likelihood that the California-based company would give up its 16-month fight for independence.

Shares in PeopleSoft soared 8 per cent in morning trading in New York after the announcement that Mr Conway would step down. He will be replaced by PeopleSoft's founder and chairman, Dave Duffield.

Mr Conway had led a robust campaign against Oracle, rejecting offers from its chief executive, Larry Ellison, four times and claiming Mr Ellison wanted to "kill" the business.

Mr Conway moved to PeopleSoft as its chief executive in September 1999, after eight years in sales and marketing at Oracle. He said after Mr Ellison's first approach in June 2003: "It's like me asking if I could buy your dog so I can go out back and shoot it."

While PeopleSoft said it was still considering what to do about Oracle's offer, analysts commented that the overthrow of Mr Conway might prompt Oracle to raise its bid. It initially offered $16 a share, then raised it twice to a high of $26 before cutting it to $21 in May, citing a drop in PeopleSoft's market value. PeopleSoft could also find itself targeted by other software companies that would make a bid for it, such as Germany's SAP.

The ousting of Mr Conway could net him a massive pay-off. The company improved his severance package last year to a deal which would have netted him more than $62m in options, stock and cash in the event that Oracle's bid succeeded. While Mr Conway's departure as chief executive has not been prompted by a change of control of the company, he may be entitled to a similar amount because he has been forced to step down by PeopleSoft's board.

Oracle received a boost in its sustained attempts to buy PeopleSoft last month when a federal judge in San Francisco rejected arguments by US antitrust regulators that Oracle's takeover of PeopleSoft would harm competition. The European Commission is set to announce its own ruling by the end of October.

PeopleSoft, whose headquarters are in Pleasanton, issued a statement that said: "The board said its decision resulted from a loss of confidence in Mr Conway's ability to continue to lead the company."

It also named two new joint presidents, Kevin Parker and Phil Wilmington, and said Aneel Bhusri would become its vice chairman. Mr Conway remains a director of PeopleSoft, though he may step down from this position too.

If Oracle does clinch a deal to buy PeopleSoft, its employees would share a $200m windfall. Its executives would be in line for up to two years' pay and bonuses.