Oracle: PeopleSoft Antitrust Review May Not Conclude Until January

Executive VP Chuck Phillips says the Justice Department has told the company its review may extend into the new year.
SAN FRANCISCO (AP) - A top Oracle Corp. executive said Thursday that a pivotal antitrust review of the business software maker's hostile takeover bid for PeopleSoft Inc. might not be finished by the end of the year as management had expected.

The U.S. Department of Justice has told Redwood Shores-based Oracle its inquiry may extend into January, according to Chuck Phillips, an Oracle executive vice president.

Oracle has been telling investors and the media for months the department's review would be completed in November or December, but Phillips said regulators want to dig deeper into the proposed deal and its potential impact on the $20 billion business applications software market.

"There are a lot of people from the DOJ involved and they are trying to learn a complex situation quickly," Phillips said during a presentation at a Goldman Sachs investment conference in New York. "We have to make sure they have all the information they need. If they need until January, (then) take until January."

The Justice Department also is taking sworn depositions from many interested parties in the business applications market, Phillips said. But Phillips said the thoroughness of the review shouldn't be interpreted as a sign that regulators are preparing to block the deal.

Oracle's $19.50-per-share offer for PeopleSoft is set to expire Dec. 31, but that deadline is flexible. The bid already has been extended five times since Oracle first made its unsolicited offer for PeopleSoft in early June.

The price tag has escalated from $5.1 billion in early June to $7.5 billion--Oracle's estimate on how much it would cost to complete the takeover.

Oracle probably will have to up the ante again because PeopleSoft's stock has been trading above the current offer for more than a month. PeopleSoft's shares fell 12 cents to close at $21.60 on the Nasdaq Stock Market, where Oracle's shares declined 20 cents to close at $12.57.

But industry analysts say Oracle doesn't need to make its next move until antitrust regulators decide if the proposed deal would harm the thousands of companies, government agencies and schools that depend on business application software to help run their operations.

PeopleSoft, the second-largest business applications software maker behind Germany-based SAP, contends Oracle would use a takeover to reduce customer choices.

Oracle believes a PeopleSoft combination would create a stronger company that would have more resources to meet customers' needs while competing with a still-larger SAP and hundreds of other smaller software makers.

European antitrust regulators also are reviewing Oracle's bid, but that inquiry appears to be trailing the department's inquiry, Phillips said. The European Commission has until next Monday to clear the deal or open an in-depth, four-month probe known as "phase two."

"A phase-two (EU) review would be standard for a transaction of this size and would also align the European Commission's timing with that of the U.S.," Oracle spokesman Jim Finn said.

While it waits for regulators to complete the PeopleSoft reviews, Oracle will remain on the lookout for other possible acquisition candidates, Phillips said.

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