WSJ Article saying Larry wants to keep fighting:
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Oracle Aims to Defend PeopleSoft Bid in Court
CEO Seeks Board Backing For Legal Row if Takeover
Is Attacked by Regulators
By MYLENE MANGALINDAN and JOHN R. WILKE
Staff Reporters of THE WALL STREET JOURNAL
Oracle Corp. is laying the groundwork for a possible court battle with the Justice Department over the company's $9.4 billion hostile acquisition bid for PeopleSoft Inc.
Larry Ellison, Oracle's chief executive, has solicited the support of some board members to fight the government in court if the Justice Department accepts a staff recommendation to oppose the deal, a person familiar with the matter said.
Most companies typically walk away from proposed mergers if the Justice Department sues to block them. But a few companies have resisted, and Oracle officials have expressed confidence that the process is far from over.
"PeopleSoft is engaged in a very long and laborious lobbying effort with the Justice Department to persuade them that there are, in fact, antitrust problems with the merger of these companies, if you're defining the market extremely narrowly," Mr. Ellison said during a presentation at an investment conference. "We don't think those arguments will prevail in the end. We think we will clear and we think we'll be able to buy PeopleSoft."
Oracle launched the takeover effort in June. PeopleSoft has flatly rejected several offers, including a bid that Oracle raised last week by 33% to $26 a share. The Pleasanton, Calif., maker of human-resources and financial-software programs has insisted the price remains too low.
PeopleSoft also has argued vehemently that a combination with Oracle would reduce market competition for business-application software, and has tried to convince the Justice Department of its case.
On Tuesday, Justice Department staff attorneys agreed, issuing a preliminary recommendation that the U.S. government file suit to seek an injunction against the transaction. A final decision about whether to do so is expected to be made by the Justice Department's antitrust chief, R. Hewitt Pate.
Mr. Ellison has said that he would recommend to Oracle's board that the Redwood Shores, Calif., company fight the government in court over its request for an injunction. Mr. Ellison recently has spoken informally to some of the company's directors and they expressed confidence that Oracle has a strong case, according to a person familiar with the matter.
If the Justice Department files suit, Oracle is expected to argue in court that the department staff defined the business-software market too narrowly, and failed to account for new offerings from major competitors, including Microsoft Corp. Oracle is also expected to argue that the deal's economic efficiencies -- cost savings, streamlined development and marketing -- far outweigh any negative impact on competition.
Oracle is expected to meet with the Justice Department's Mr. Pate to make a final pitch for the deal. The parties have said that Mr. Pate will make a final decision by March 2.
The Justice Department's review process is a multistage effort, with staff recommendations delivered to the assistant attorney general for antitrust, Mr. Pate. He must then decide both the merits of their argument, and more practical concerns such as whether the case will stand up in court and whether he has the resources for a long battle.
Historically, the antitrust chief typically agrees with the staff. Lawyers close to the case predict that Mr. Pate will do so here, authorizing a lawsuit in U.S. District Court seeking a preliminary injunction to stop the merger from going forward.
If the government seeks to block a merger in court, most companies simply walk away, though a few fight the government and win. A recent example was the Justice Department's suit to block SunGard Data Systems Inc.'s buyout of Comdisco in 2001.
The case had some parallels to the Oracle case: the Justice Department said that SunGard would combine two of the top three players in a market, but the judge found that the Justice Department drew the market too narrowly, allowing the deal to proceed.
PeopleSoft's shares continue to reflect pessimism that the deal will take place. At 4 p.m. Wednesday, the shares traded on the Nasdaq Stock Market at $21.50, off 0.9% -- well below Oracle's $26-a-share bid. Also on Nasdaq, Oracle shares rose 2.3% to $13.70.
Write to Mylene Mangalindan at mylene.mangalindan@wsj.com
Updated February 12, 2004 |
