Update: Oracle to 'vigorously challenge' DOJ suit in PeopleSoft bid

Computerworld - The U.S. Department of Justice yesterday said it will file an antitrust suit to block Oracle Corp.'s multibillion-dollar hostile bid for rival PeopleSoft Inc.
This is possibly the most formidable obstacle facing Oracle, which has been an unwanted suitor to PeopleSoft since June, when it first launched what is now a $9.4 billion offer. The staff at DOJ had earlier this month recommended the deal be blocked (see story).
After learning of the DOJ decision, Oracle late yesterday released a statement saying it will "vigorously challenge" the lawsuit and is withdrawing a slate of nominees it had put forward for election to PeopleSoft's board.
Oracle said it was withdrawing the slate because it expects litigation over the deal to extend beyond March 25, when the shareholders' meeting will take place.
"We believe that the government's case is without basis in fact or in law, and we look forward to proving this in court," said Oracle spokesman Jim Finn.
The DOJ cited concerns that the merger would harm competition if allowed to take place.
"I think the decision here was very clear," Assistant Attorney General R. Hewitt Pate said yesterday during a news conference. "Going from three to two companies in this market is a competitive problem that needed to be stopped. Under any traditional merger analysis, this is an anticompetitive deal."
Seven state attorneys general are joining the suit, to be filed in U.S. District Court in San Francisco.
This may let PeopleSoft users, who have generally expressed hostility to the deal, breathe a sigh relief, at least for now. "I am very pleased with the DOJ's action and sincerely hope they prevail in the case," said Jim Prevo, CIO at Green Mountain Coffee Roasters Inc. in Waterbury, Vt. Prevo, a PeopleSoft applications user, has been cautiously optimistic over the government's actions. "Oracle's hostile bid represents nothing but bad news for PeopleSoft customers.
"An Oracle win would significantly decrease the level of competition in the enterprise applications software business, and it would cost PeopleSoft's customers tens of billions of dollars over the long term due to otherwise unnecessary conversions to Oracle applications," he said.
Another user, Dave Hyzy, director of IT at Benderson Development Co., a Buffalo, N.Y.-based real estate developer running PeopleSoft World financial software, said, "I am glad to see the DOJ taking seriously the potentially disastrous impact of an Oracle takeover of PeopleSoft. There is no way that this [bid] could be construed as being in the best interests of the customers," he said. "Fortunately some of