DOJ Staff Recommends Against Oracle Takeover of PeopleSoft

The U.S. Department of Justice's Antitrust Division opposes Oracle's $9.4 billion takeover bid of PeopleSoft and has recommended to senior officials of the Justice Department that they follow suit, according to PeopleSoft.

The U.S. Department of Justices Antitrust Division opposes Oracle Corp.s $9.4 billion takeover bid of PeopleSoft Inc. and has recommended to senior officials of the Justice Department that they follow suit, according to a statement by PeopleSoft.

While the DOJ has not officially confirmed that the Antitrust Divisions staff is against the deal, PeopleSoft said late last night that it was informed the staff has recommended that senior staff block the deal.

PeopleSoft has also said that the DOJ will make its final decision no later than March 2.

The DOJ has been investigating Oracles hostile takeover bid of PeopleSoft, lobbed in June of 2003. A decision by the department to seek an injunction in federal court against the deal could all but quash it—unless, as has been speculated, Larry Ellison, Oracles CEO, decides to fight the deal in court.

While the Antitrust Divisions staff has made its recommendation to the office of the Assistant Attorney General, Hewitt Pate, its not certain that Pate will follow the staffs determination.

It is incumbent upon Pate, as the highest ranking official of the DOJ, to look at all sides of the issue including documents from both Oracle and PeopleSoft, as well as testimony from customers and competitors.

/zimages/6/28571.gifWill Oracle succeed in its takeover bid? For two different views, read "Oracle Must Build a Future Without PeopleSoft" and "PeopleSoft, You Will Be Assimilated."

"The evidence seems to include a lot of customer complaints … that suggest customers are upset by the deal," said Charles Biggio, former DOJ attorney and partner with Aiken & Gump in New York. "Its not uncommon for the assistant attorney general to follow the recommendations of the staff."

Pate will also likely take into consideration an ongoing investigation by over half the states attorneys general, who are also looking into the potential anti-competitive nature of the deal.

Many of the state AGs are PeopleSoft customers.

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