Oracle’s Acquisition of Phase Forward Is in Trouble

Includes: ORCL, PFWD
by: Zacks Investment Research

Phase Forward (PFWD) received a request for additional information (referred to as a second request) from the United States Department of Justice (DoJ) under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR Act).

The request was related to the proposed merger between Phase Forward and Oracle Corp (NASDAQ:ORCL). The second request will extend the pre-merger waiting period imposed by the HSR Act.

Phase Forward is actively working to respond to the second request in an effort to obtain termination of the pre-merger waiting period.

The completion of the proposed merger remains subject to stockholder and regulatory approval as of now. Phase Forward has scheduled a special meeting of its stockholders on June 22, 2010, to vote on the proposed merger.

On April 16, 2010, Oracle Corp. announced the acquisition of Phase Forward for approximately $685 million in cash, or $17.00 per share.

Following the announcement, several law firms have filed a lawsuit alleging that the acquisition price of $17.00 is unfair and does not reflect the true value of the company.

Although the acquisition price of $17.00 represents a 30% premium to the stock price of the day before the acquisition was announced, the lawsuits claim that a higher value should have been attributed as the stock was trading at this level on November 17, 2009.

Currently, the stock is trading at $16.66. The stock has been trading around $16.60-$16.90 ever since the acquisition was announced. If the acquisition does not go through, the price will fall sharply.