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DOJ Clears Path for PeopleSoft to Buy J.D. Edwards

The U.S. Department of Justice Monday terminated the required waiting period that hung over PeopleSoft and J.D. Edwards with regard to the companies' planned merger, clearing the path for PeopleSoft to purchase J.D. Edwards as planned.

Not to be outdone, Oracle extended its $6.3 billion tender offer for PeopleSoft to August 15 from this Friday.

The decision from the Justice Department, which lets federal antitrust enforcement authorities review the competitive effects of proposed mergers and acquisitions prior to their consummation, is a sound victory for PeopleSoft.

The Pleasanton, Calif. maker of enterprise applications is in the fight of its life to remain free from the clutches of Oracle, which is staying aggressive in its bid to acquire the company for $6.3 billion.

Were the DOJ to not allow early termination of the review period on the merger as called for under the Harts-Scott-Rodino Act, Oracle might have the opportunity to step in and purchase PeopleSoft before it could make its play for Denver's J.D. Edwards. Now, if the PeopleSoft, J.D. Edwards merger goes through, the combined company would be tougher for Oracle to swallow.

Oracle, under antitrust investigation in its bid for PeopleSoft since the DOJ issued a second request for information from it two weeks ago, is ostensibly at the mercy of the government organization. Legal experts have said if the DOJ doesn't like what it finds in Oracle briefings and filings about the subject, it could kill its bid for PeopleSoft.

As it stands now, PeopleSoft may commence exchanging $1.75 billion in shares under the firms' amended agreement beginning this Thursday at midnight EDT.

PeopleSoft's President and CEO Craig Conway, bullied in the press recently by Oracle Chairman and CEO Larry Ellison, was ecstatic in a public statement.

"The Department of Justice's decision to grant early termination is great news," Conway said. "This is a very important milestone and clears the way for the J.D Edwards acquisition to be completed."

The news did nothing to deter Redwood Shores, Calif.'s Oracle, which countered with its own news Monday by extending its offer deadline for PeopleSoft.

"We are extending our offer for PeopleSoft and we remain fully committed to acquiring PeopleSoft, with or without J.D. Edwards," said Oracle spokesman Jim Finn.

The tender offer was previously set to expire at midnight EDT on Friday, July 18.

Jon Derome, Program Manager, Business Applications and Commerce at The Yankee Group, said that while the termination of waiting period was a small victory for PeopleSoft, it comes as no surprise because J.D. Edwards sells primarily to mid-market customers while PeopleSoft, like Oracle, SAP and Siebel, sell to large businesses. This made it unlikely that the DOJ would ask PeopleSoft for additional information about its intentions.

Derome also said it appears from Oracle's quick announcement of a deadline extension to buy PeopleSoft shows that it was prepared for the PeopleSoft clearance.

Accordingly, he likes Oracle's chances in the long run. "Oracle has a long way to go to make the acquisition happen," Derome told internetnews.com. "But they have the resources and the incentive to acquire PeopleSoft's business."

Both announcements epitomize the aggressive chess match being waged between Oracle and PeopleSoft, as both companies vie for second place in the market for enterprise applications to Germany's SAP.

Since PeopleSoft announced its intentions to buy J.D. Edwards last month, Oracle made a hostile offer to acquire PeopleSoft. A vicious exercise in lunge and parrying ensued, with both businesses suing each other and simultaneously trying to curry customer favor.

Experts anticipate the issue will be drawn out now that the government is inspecting the deal, and listening to complaints from states such as Connecticut, who sued Oracle last month for antitrust violations.