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Courts urge govt to block Oracle’s bid

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CIOL Bureau
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LOS ANGELES: U.S. Justice Department lawyers urged the government to block a $9.4 billion bid for business software maker PeopleSoft Inc. by Oracle Corp. on antitrust grounds, dealing a setback to the proposed hostile takeover.



Shares in PeopleSoft, which had rejected a sweetened offer from its larger rival Oracle on Monday, fell almost two percent to $21.33 in after-hours trade, 18 percent below the $26 per share Oracle has offered, as investors put longer odds on the success of its bid.



But Oracle said it believed the merger would eventually be cleared by regulators although the Redwood Shores, California-based company stopped short of saying whether it would challenge a ruling against the deal in court if it came to that.



Pleasanton, California-based PeopleSoft, which has fought a bitter campaign against the Oracle offer, said it had been told late on Tuesday that staff lawyers at the Department of Justice had recommended that regulators block Oracle's bid after an eight-month review.



A final decision by senior Department of Justice officials is expected by March 2, the company said.



Charles Di Bona, an analyst at Sanford C. Bernstein & Co., said investors had anticipated that the merger could run into anti-trust problems with U.S. or European regulators, which was why PeopleSoft's shares had traded below Oracle's offer.



"It's sort of a political decision to prosecute. The staff recommendation is heavily weighted but not a done deal," Di Bona said.



James Rill, a lawyer for Oracle, said the Department of Justice would look beyond the staff recommendation in evaluating the proposed merger and making a final call.



"In my experience, the Assistant Attorney General will take ample time to review the facts of this situation with an open mind and meet with Oracle before coming to a decision on the matter," Rill said. "This process simply is not complete."



© Reuters

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