State AGs investigating Oracle bid

Attorneys general from more than two dozen states have agreed to cooperate on an antitrust probe of Oracle Corp.’s hostile bid for PeopleSoft Inc., The Wall Street Journal reported Friday.

The joint investigation does not indicate a forthcoming lawsuit to block Oracle’s $7.3 billion takeover attempt, the newspaper noted. The arrangement allows the states to share the costs of an investigation and divide up the responsibility for carrying it out.

The WSJ named New York, Texas and California as among the states pooling their resources. A spokesman for New York Attorney General Eliot Spitzer declined to comment on any aspect of the attorney general’s position regarding Oracle’s ongoing attempt to win control of PeopleSoft through a tender offer to its shareholders, against the wishes of the company’s directors.

One state, Connecticut, has already launched a lawsuit attempting to block a takeover, citing the anticompetitive effects of a merger between two of the largest enterprise software vendors. Connecticut’s pending litigation prevents it from joining in the other states’ investigation, according to the newspaper.

The U.S. District Court for the District of Connecticut is hearing Connecticut’s lawsuit. Oracle was granted an extension until Aug. 6 to respond to the state’s complaint.

The proposed acquisition is also being examined by the U.S. Department of Justice (DOJ), which slowed Oracle down by requesting from the company additional information about its plans.

The biggest obstacle blocking Oracle’s takeover attempt is PeopleSoft’s “poison pill,” a provision in its bylaws that allows PeopleSoft to manipulate its shares to thwart a hostile acquisition. Oracle filed suit in Delaware’s Chancery Court challenging the legality of PeopleSoft’s poison pill. That suit is on hold until mid-September, at which time Oracle hopes to have more information on the DOJ review, the company told the court.

Oracle’s tussle with PeopleSoft began in June, when it announced an unsolicited $5.1 billion offer to buy its rival, days after PeopleSoft said it would expand its share of the business applications market by buying J.D. Edwards & Co. PeopleSoft and Oracle have since waged a fierce war of words, with PeopleSoft warning about dire ramifications for its customers should Oracle’s acquisition succeed, while Oracle vows to continue pursuing PeopleSoft for as long as needed to take over the company.

Soon after announcing its acquisition intentions, Oracle increased its bid for PeopleSoft to $6.3 billion. The price tag jumped by another $1 billion after PeopleSoft bought most shares of J.D. Edwards in the process of closing that friendly buyout. Oracle’s $19.50 per share cash tender offer to PeopleSoft’s shareholders is set to expire Aug. 15, but the company has several times extended the offer’s duration, and is likely to do so again.