The US Department of Justice (DoJ) has said it will not appeal against the ruling in Oracle's proposed takeover of rival PeopleSoft.
The DoJ took Oracle to court to block the bid, claiming that the takeover would damage competition in the ERP software market. In September, a Californian district court ruled in Oracle's favour.
The head of the DoJ's anti-trust division, R. Hewitt Pate, confirmed the agency would not appeal the decision. The detailed factual findings in the court case would have received "great deference" from appeals courts, he said. "The evidence, including the testimony of numerous customers, strongly supported our case against this proposed transaction," Pate wrote. "While we disagree with the district court's disappointing decision, we respect the role of the courts in the United States merger review process."
Oracle continues to pursue a $7.7 billion takeover of PeopleSoft, an offer first made in June 2003. Last week, it again extended a deadline for PeopleSoft's shareholders to approve the takeover.
The last regulatory obstacle for Oracle is winning approval of the European Commission, where officials say Commissioner Mario Monti wants to rule on the case before his tenure ends on 1 November. Given the time needed to get approval to block mergers it seems unlikely that Monti could veto the merger by the end of October, raising expectations that the Commission will support it.
If the Commission approvals the deal, Oracle must still win the support of PeopleSoft's board, which has so far opposed the deal and can block it with a "poison pill" provision in PeopleSoft's bylaws. Oracle now has a new top executive at PeopleSoft to negotiate with, however. The PeopleSoft board fired its president and CEO Craig Conway on Friday, citing "a loss of confidence" in his leadership.
PeopleSoft said its board would meet soon to consider the implications of the DoJ's decision. It reiterated its previous rejection of the deal. "PeopleSoft's board has carefully considered and unanimously rejected each of Oracle's offers, including its current offer of $21 per share. ... The board received the opinions of Citigroup and Goldman Sachs that the $21 per share offer was inadequate from a financial point of view," the company said.
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