Oracle fights US move to stop bid

WASHINGTON: Oracle Corp. offered a sharp rebuke to U.S. antitrust authorities' move to block its proposed $9.4 billion acquisition of software rival PeopleSoft Inc., vowing to fight the Department of Justice's complaint in court.

"We believe that the government's case is without basis in fact or in law, and we look forward to proving this in court," said Jim Finn, an Oracle spokesman.

The Justice Department said in a complaint filed earlier on Thursday in a federal court in San Francisco that the hostile takeover would hurt competition, by eliminating one of only three players in the market for software sold to large business customers to manage finances, human resources, sales forces and other business functions.

"We believe this transaction is anti-competitive -- pure and simple," said Hewitt Pate, the department's antitrust chief. "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."

Attorneys general from Hawaii, Maryland, Massachusetts, Minnesota, New York, North Dakota, and Texas are joining the lawsuit, the department said.

Oracle had earlier in the day issued a statement blaming the decision on an intense lobbying campaign by PeopleSoft.

In the second statement issued by the database software company in as many hours, Oracle's Finn said again that the government's lawsuit "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."

PeopleSoft issued a statement calling on Oracle to drop the deal "now that the antitrust day of reckoning has arrived."

Pate said in a press briefing that antitrust attorneys at the department had met Oracle before making their decision. He said Oracle had made no offers to the department to settle the case.

Pate said the government case would be bolstered by testimony from large business customers, who would be left with fewer choices and higher prices if the deal were allowed to proceed.

"Their evidence is going to be very important and we heard (from) a great number of them," Pate said.

Shares of Oracle rose 9 cents to close $13.28 on the Nasdaq market. PeopleSoft shares fell 35 cents to close at $21.78 on the same market.

Pleasanton, California-based PeopleSoft has argued that Oracle launched its takeover bid in June last year to disrupt the market for business application software.

Redwood Shores, California-based Oracle has raised its bid several times in an effort to win over PeopleSoft but the offers have all been rejected.

Oracle, which dominates the market for database software, ranks third in the business application software market behind PeopleSoft and Germany's SAP AG, the largest supplier.

Oracle had tried to change the department's mind, arguing that its legal rationale was flawed, according to sources familiar with the case.

Oracle had also argued, these sources said, that the market would remain competitive because of the possibility that Microsoft Corp. would jump into the same business.

However, the department said in a statement on Thursday that its decision was based on traditional merger analysis. And Pate said Microsoft's entry into the market "could not be relied upon to (undo) the harm from this transaction."

"If this merger is permitted and PeopleSoft is eliminated as a competitor, Oracle's incentive to offer deep license and maintenance discounts, to strive to best meet customers' functional requirements, to reduce customers' total cost of ownership, and to make other business concessions will be reduced," the department said in its complaint.

(Additional reporting by Elinor Mills Abreu and Jeffrey Goldfarb)