Antitrust lawyers could thwart Oracle bid
Antitrust lawyers could thwart Oracle bid
Despite heaping pressure back on the PeopleSoft board by upping its offer to US$26 a share for the company, Oracle's attempt to acquire its enterprise software making rival could still hit the skids, after it emerged that antitrust lawyers at the U.S. Department of Justice are recommending that the Department move to block Oracle's acquisition.
While it is not always the case that the ultimate decision in such matters tallies with that of the staff, it is usually a fairly good indicator of the conclusion the Department will reach, and as such spells bad news for Oracle.
The Justice Department lawyers are pressing for the Department to issue a suit to block the move as they feel it would be anticompetitive, with an Oracle/PeopleSoft combination leaving too few players left in the market, what with the companies holding second and third spots in the enterprise application software market, behind leaders SAP.
This is the message that PeopleSoft executives have been trying to get across to the regulators, by means of intense lobbying. It seems as though they have found a sympathetic ear, which will come as some relief to the PeopleSoft board, which was under renewed pressure following Oracle's improved offer, which was around US$4 a share more than the current trading price. Should the DoJ file a suit, it will be much more difficult, not to mention a lot more expensive, for Oracle to complete this deal.
Oracle Chief Executive Larry Ellison said in the early stages of the bid last year that Oracle would not contest the DoJ's decision if it ruled against the proposed buyout. More recently though, he has changed his tune, perhaps as a result of a feeling that the decision was to go the other way because of the lengthy deliberation by regulators. Now Ellison says he would be prepared to challenge the Justice Department if they ruled against Oracle.
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