EC OKs Oracle/PeopleSoft

Oracle Corp.s (Nasdaq: ORCL) attempt to swallow up PeopleSoft Inc. (Nasdaq: PSFT) overcame a major hurdle today when the European Commission gave the hostile takeover bid a green light.

Commission officials said that there was insufficient evidence of competitive harm as a result of a takeover. If Oracle’s bid is successful, the number of big-name enterprise application software vendors would be cut from three to two, the Commission said, with a combined Oracle/PeopleSoft battling it out with German software giant SAP AG (NYSE/Frankfurt: SAP).

Officials also pointed out a number of smaller software vendors who are already competing aggressively with the big three. These include Lawson Software Inc., IFS AB, Intentia (Stockholm: INT B), and QAD Inc.. Coming up on the outside is a familiar name; the Commission said that Microsoft Corp. (Nasdaq: MSFT) is also winning enterprise business in this space.

The decision will be a boost for Oracle CEO Larry Ellison; Brussels has often been a thorn in the side of U.S. firms such as Microsoft as they attempt to tap the lucrative European software market.

More importantly, the Commission’s go-ahead adds momentum to the takeover bid. Last month a U.S. District Court removed another major obstacle in the takeover’s path, and Oracle recently attempted to dismantle PeopleSoft’s takeover defense in a Delaware court (see Oracle Prevails in Antitrust Lawsuit and Oracle Battles With PeopleSoft).But there is still plenty of water to go under this particular bridge. Last week PeopleSoft posted a strong set of third-quarter results, suggesting that the Pleasanton, Calif.-based vendor is healthier than many industry observers believed (see PeopleSoft Plot Thickens).

To complicate matters even further, comments from newly installed PeopleSoft CEO Dave Duffield suggest that he is keen to drive the value of the Oracle bid up. Last week Oracle extended its offer, which currently stands at $21 per share, for the umpteenth time since it launched the takeover bid in June 2003 (see Oracle Extends Tender Offer and Oracle Extends Tender Offer Again).

In a statement released earlier today, PeopleSoft said that its board of directors will review the implications of the Commission’s decision “in due course.”

The market responded positively to today’s news. Shares of Oracle rose 14 cents (1.15%) to $12.27 today, and PeopleSoft stock rose 12 cents (0.61%) to $19.88.

— James Rogers, Site Editor, Next-Gen Data Center Forum0