The judge in the Oracle/DoJ trial over the takeover of PeopleSoft has ruled in Oracle's favour, leaving the way open for the software giant to persuade PeopleSoft shareholders that an acquisition is in their interest.
Judge Vaughn Walker of the Northern District of California said the DoJ has failed to prove its case that a takeover of PeopleSoft would be anti-competitive. "Because plaintiffs have not shown by a preponderance of the evidence that the merger of Oracle and PeopleSoft is likely substantially to lessen competition in a relevant product and geographic market," he wrote, "the court directs the entry of judgment against plaintiffs and in favour of defendant Oracle." The DoJ has 10 days to appeal.
The decision means Oracle's 15-month campaign to buy PeopleSoft for $7.7 billion in cash will continue.
The DoJ said it was disappointed by Judge Walker's decision, with assistant attorney general Hewitt Pate saying that it was considering its options.
The decision is also a setback for the PeopleSoft board, but there still remain several hurdles for Oracle. The biggest obstacle is PeopleSoft's "poison pill" anti-takeover provision in its bylaws that allows it to manipulate its shares to make a hostile acquisition prohibitively expensive. Oracle is challenging the legality of PeopleSoft's poison pill and a trial on that point is scheduled for later this month.
Another is convincing PeopleSoft's shareholders. Oracle is offering $21 per share and it has extended its offer by two weeks until 24 September. So far, about 26.5 million shares - or 7.2 percent of PeopleSoft's outstanding shares - have been tendered into Oracle's offer, up five million from August. That percentage may rise further with the DoJ's defeat.
In a first reaction to the ruling Oracle said that it removes a significant roadblock to the acquisition. "This decision puts the onus squarely on the board of PeopleSoft to meet with us and to redeem their poison pill so that the shareholders can accept our offer," chairman Jeffrey Henley said in a statement. Oracle has sent a letter to PeopleSoft's board requesting a meeting.
PeopleSoft said in a statement that its board of will review the implications of the ruling. However, it added that its board already considered and unanimously rejected each of Oracle's offers as inadequate.
Oracle began its pursuit of PeopleSoft in June last year. The DoJ sued Oracle in February on anti-trust grounds, claiming the proposed acquisition would eliminate one of only three players in the market for financial management and human resources software sold to large businesses.
PeopleSoft's shares ended trading up 13.7 percent. Oracle's shares were up 2.7 percent.
Oracle and PeopleSoft are also remain locked in another legal battle, where PeopleSoft has charged Oracle with unfair business practices. Oracle has countered with a complaint accusing PeopleSoft of illegally refusing to seriously evaluate Oracle's bid, and of improperly creating a "customer assurance program" that could make an Oracle acquisition of PeopleSoft very costly for Oracle. That case is schedule for trial in November.