Analysts Warn That Oracle Takeover Of PeopleSoft Is Becoming More Likely

by Glen Shapiro, LawAndTax-News.com, New York

17 September 2004

Following the rejection last week of the US Department of Justice's antitrust objections regarding business software provider, Oracle's planned takeover of PeopleSoft, analysts are warning clients to prepare for the possibility that the hostile bid may go ahead.

Ruling last week, US District Court Judge Vaughn R. Walker argued that the DoJ had failed to prove in its suit that the merger of the two firms would harm competition in the enterprise software market.

"Plaintiffs have proven that the relevant product market does not include incumbent systems or the integration layer. But plaintiffs failed to prove that outsourcing solutions, best of breed solutions, and so-called mid-market vendors should be excluded from the relevant product market. Furthermore, plaintiffs have failed to establish that the area of effective competition is limited to the United States."

In an investor briefing sent out on Tuesday, Forrester Research vice president, Paul Hamerman observed that as a result of the ruling:

"As Oracle tries to complete the takeover, PeopleSoft customers must learn to live with a level of uncertainty regarding the future of their software applications and maintenance services."

However, the completion of the takeover is still far from certain, as the Department of Justice was given 60 days from the initial ruling to file an appeal, PeopleSoft's own lawsuit against Oracle is expected to launch later this year, and the European Commission has asked for more documentation from Oracle as part of its own investigation into the matter.

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