PeopleSupport's Board Rejects Acquisition Proposal

PeopleSupport Inc., a provider of business outsourcing, said its board rejected an unsolicited acquisition proposal from IPVG Corp. (IP) and AO Capital Partners because the companies didn't prove they could fund the purchase.

IPVG and AO Capital had offered $17 a share, Los Angeles- based PeopleSupport said today in a statement. The companies had offered $15 a share in November. The next month, PeopleSupport said it would reject the offer as ``inadequate.''

``We have been extremely patient and accommodating to enable IPVG and AO Capital to demonstrate their capability to consummate their proposed transaction,'' Frank Perna, the lead independent director of PeopleSupport's board, said in the statement. IPVG and AO Capital ``did not respond with any useful information,'' he said.

IPVG, based in Makati City, Philippines, operates data services, online gaming and outsourcing businesses. About 8,400 of PeopleSupport's 9,000 employees are in the Philippines, PeopleSupport said in the statement. It also has centers in Costa Rica and the U.S.

PeopleSupport fell $1.52, or 11 percent, to $12.51 as of 4 p.m. in Nasdaq Stock Market composite trading, the biggest drop since Aug. 13. The shares declined 35 percent last year.

To contact the reporter on this story: Meg Tirrell in New York at mtirrell@bloomberg.net.

To contact the editor responsible for this story: Colleen McElroy in New York at cmcelroy@bloomberg.net.

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