U.S. DoJ to block Oracle's PeopleSoft bid
U.S. DoJ to block Oracle's PeopleSoft bid
In what is a major blow to Oracle's hopes of success in its US$9.4 billion hostile takeover bid for PeopleSoft, the U.S. Department of Justice (DoJ) has announced that it will file an antitrust lawsuit to block the deal.
While the decision is not entirely unexpected, with the news that DoJ staff had recommended that the Assistant Attorney General block the deal having been leaked a couple of weeks ago, the confirmation that the antitrust chief has concurred with his staff is still a bitter blow to Oracle CEO Larry Ellison's hopes of getting his hands on the company led by one of his former charges, Craig Conway.
"We believe this transaction is anticompetitive - pure and simple," said R. Hewitt Pate, Assistant Attorney General in charge of the Department's Antitrust Division, in a statement. "Under any traditional merger analysis this deal substantially lessens competition in an important market. Blocking this deal protects competition that benefits major businesses, as well as government agencies that depend on competition to get the best value for taxpayers' dollars."
Pate added that Oracle, PeopleSoft and SAP are the only companies that currently compete to develop and sell the high-function integrated human resource management and financial management services software.
He pointed out that Oracle and PeopleSoft frequently engage in head-to-head competition during the complicated and lengthy bidding process through which these software solutions are purchased, with customers benefiting from aggressive price discounts and more innovative software as a result.
"Large companies, institutions, organisations and government entities depend on competition to provide and maintain enterprise software that is critical to their efficient and cost-effective day-to-day operations," said Pate. "This lawsuit seeks to ensure that there will continue to be vigorous competition in this important industry."
Oracle spokesman Jim Finn argued that the DoJ's decision has no grounding in reality, and suggested that the antitrust regulators had fallen under the weight of intense pressure from PeopleSoft.
"The Department of Justice decision follows an aggressive lobbying campaign by PeopleSoft management. It is inconsistent with the overwhelming evidence of intense competition in the markets we serve, and we believe it is without basis in fact or in law. A combined Oracle/Peoplesoft will significantly benefit all customers and shareholders involved."
PeopleSoft CEO Craig Conway said that now was the time for Oracle to forget about acquiring PoepleSoft.
"Now that the antitrust day of reckoning has arrived and the Justice Department has announced its decision to sue to block the transaction, it is time for Oracle to abandon its efforts to acquire the Company. Both companies should now devote all of their energy to competing in the marketplace to provide better products and services for customers. That's the PeopleSoft way of creating greater value for our stockholders."
Related Article: