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Oracle president Safra Catz testified Friday that PeopleSoft CEO Craig Conway proposed a merger between the companies a year before Oracle's hostile takeover bid for its competitor last summer.
Catz, testifying in U.S. District Court in San Francisco in the antitrust lawsuit brought by the Justice Department in an effort to block Oracle's proposed takeover of PeopleSoft, said Conway called Oracle chairman and CEO Larry Ellison to discuss a merger in 2002. Catz said PeopleSoft CFO Kevin Parker contacted her and the two agreed to meet with other representatives of both companies at "a nice hotel in the East Bay." Ron Wohl, an Oracle executive VP, and Cliff Godwin, Oracle's chief application architect, met with PeopleSoft's Parker and Ram Gupta, a technologist.
At the meeting, Parker said a merger would make both companies more competitive with SAP and Siebel Systems Inc. in the business-applications software market, according to Catz.
The Justice Department wants to block Oracle's bid—which PeopleSoft has repeatedly rejected—on the grounds that it would stifle competition in the business apps market. The government argues that there are only three major players in the market for so-called "high-function" application software—Oracle, PeopleSoft, and SAP—and that losing one would raise prices for customers. Oracle argues that other vendors, including Microsoft, belong to the market for high-function apps.
Catz said Parker offered no explanation of why merger talks broke down, other than that PeopleSoft no longer felt the combination was viable.