Conway called Ellison in June 2002 to discuss a possible merger more than a year before Oracle made its buyout bid for PeopleSoft.
Before a packed courtroom here in the U.S. 9th District Court, Ellison said Conway proposed the merger discussions as the best way for PeopleSoft and Oracle to fend off competitive pressures from SAP AG as the dominant player in the business applications market.
"We thought we would be better able to compete if we joined forces," he said, adding that that at the time Ellison thought it was an "interesting idea."
Ellison said he told Conway that he needed more time to think about the deal. He then initiated discussions, which included Oracle President Safra Catz. The two companies subsequently held high-level talks on how to carry out a merger.
Following these meetings, Ellison was convinced even more that this would be the "smart thing we could do to improve our business position," he said.
However, he could not accept Conways demand that the PeopleSoft executive run the applications group because Oracle would be the majority owner of the merged companies. Once these talks failed, it wasnt until the day that PeopleSoft announced its planned merger with J.D. Edwards that Oracle decided the time was right to make its tender offer.
Oracles legal team announced on Monday that it would not call Conway, who had been subpoenaed to appear on Tuesday. Before the trial started, Oracle attorneys predicted they would grill Conway for six hours, press reports said.