DOJ won’t appeal Oracle ruling

WASHINGTON – The U.S. Department of Justice (DOJ) will not appeal a ruling by a California judge that would allow Oracle Corp.’s proposed hostile takeover of competing software vendor PeopleSoft Inc.

In statement released Friday, R. Hewitt Pate, assistant attorney general in charge of the DOJ’s Antitrust Division, said the agency will not appeal a September decision of the U.S. District Court for the Northern District of California. In that ruling, Judge Vaughn Walker struck down the DOJ’s attempts to block the proposed merger on antitrust grounds.

The detailed factual findings in the court case would have received “great deference” from appeals courts, Pate said.

“The evidence, including the testimony of numerous customers, strongly supported our case against this proposed transaction,” Pate said in his written statement. “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, after first offering to buy its rival in June 2003. In late September, Oracle extended a deadline for PeopleSoft’s shareholders to approve the takeover to Oct. 8.

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 Nov. 1. 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 President and Chief Executive Officer 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 Global Markets Inc. and Goldman Sachs & Co. that the $21 per share offer was inadequate from a financial point of view,” the company said in a written statement.