10 September 2004 Database and applications giant Oracle has been granted permission to pursue its $7.7 billion hostile takeover bid for rival PeopleSoft, a federal court judge has ruled.

Oracle had been barred from bidding for PeopleSoft on antitrust grounds by the Department of Justice (DoJ), but launched a legal appeal, claiming that the DoJ’s arguments were flawed.

But this week, almost two months after the hearing ended, Judge Vaughn Walker issued a 164-page ruling siding with Oracle on most counts.

In the report, Judge Walker concluded: “Plaintiffs [the DoJ] have not proved that a post-merger Oracle would have sufficient market share in the product and geographic markets” to be anti-competitive. He specifically mentioned new competitors in the market that are supposedly emerging, including Lawson Software and Microsoft.

Analysts suggested that the decision could have a far-reaching impact across the enterprise software industry.

“This doesn’t just affect Oracle. If it goes through, it will underline the view – which we have long promoted as has Oracle CEO Larry Ellison – that the industry is maturing fast and the only long-term survivors will be the really big players,” said Phil Carnelley, a research director at analysts Ovum.

Oracle executives did not waste any time in moving ahead with their takeover bid. As soon as the verdict was out, Oracle chairman Jeffrey Henley and CEO Larry Ellison sent a letter to the PeopleSoft board in which Oracle extended the deadline of its bid to September 24.

PeopleSoft has not only lost the hearing; it stands to lose 6,000 employees – including CEO Craig Conway – if the takeover bid is successful.

Both sides have spent a lot of money in fighting the bid since battle commenced in June last year. Oracle has spent nearly $60 million, while PeopleSoft has spent some $70 million in the same period.

However, the Judge’s decision may not be the end of the matter. The DoJ has 60 days to file an appeal against the ruling. The European Commission is also weighing the antitrust implications of the Oracle bid.

Links:
Oracle takeover bid eats into PeopleSoft sales (8 July 2004)
Oracle-PeopleSoft hearing reaches the final hour (2 July 2004)
Oracle-PeopleSoft would ‘create duopoly’ (10 June 2004)
Oracle’s Ellison details hostile bid for PeopleSoft (6 June 2003)