Feb 26, 2004 (11:02 AM EST)
Justice Department To Contest Oracle's Bid For PeopleSoft
Read the Original Article at InformationWeek
Oracle may have come up against the biggest stumbling block yet in its hostile takeover bid for rival PeopleSoft Inc. The Department of Justice said Thursday that it's filing a civil antitrust lawsuit in U.S. District court in San Francisco to block the acquisition attempt.
The Justice Department contends that if the merger were allowed to proceed, it would eliminate competition between two of the nation's leading providers of human-resource and financial-management software--resulting in higher prices, less innovation, and fewer choices for those that depend on this type of software.
Seven states--Hawaii, Maryland, Massachusetts, Minnesota, New York, North Dakota, and Texas--are joining the lawsuit.
"We believe this transaction is anti-competitive--pure and simple," R. Hewitt Pate, assistant attorney general in charge of the department's Antitrust Division, said in a statement. "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."
Oracle recently raised the stakes with what its executives said was a final offer of $26 per share, boosting the takeover bid to $9.4 billion. The initial bid, made in June, was worth about $5.1 billion.
However, the latest developments don't seem to have deterred Oracle. Following the announcement, an Oracle spokesman said the department's decision is the result of aggressive lobbying by PeopleSoft management and 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's board has repeatedly spurned Oracle's bids. Company officials couldn't immediately be reached for comment.