Judge gives go-ahead for Oracle's Peoplesoft bid

Oracle, the world's second largest software company, yesterday moved closer to clinching a deal to buy its smaller rival, PeopleSoft, after a US court rejected objections from the government that the deal would give Oracle a monopoly.

Oracle, the world's second largest software company, yesterday moved closer to clinching a deal to buy its smaller rival, PeopleSoft, after a US court rejected objections from the government that the deal would give Oracle a monopoly.

The decision sent PeopleSoft's shares soaring, after the major hurdle for Oracle, was removed.

The case has been one of the largest hostile takeover battles among America's technology sector. San Francisco federal judge Vaughn Walker rejected the argument of government competition lawyers, raising speculation among investors that the deal could kick off a round of consolidation among other software companies.

Oracle said in May it was willing to pay $21 (£11) a share for PeopleSoft. Following the court's decision on Thursday, it said it would extend its offer until 24 September.

Larry Ellison, chief executive of Oracle, and the company's chairman, Jeffrey Henley, wrote to PeopleSoft's board, asking to meet its directors as soon as possible.

Oracle still faces some difficulties in pushing through its deal. The European Commission is considering its own position on a possible deal and the US justice department could appeal against the ruling, though this is considered unlikely.

Oracle, ranked second in revenues to Microsoft, competes with PeopleSoft in the business applications market. The two companies combined would threaten Germany's SAP. The justice department had argued that eliminating one of only three players in the business applications market would lead to higher prices and less choice for businesses seeking to buy processing services.

Judge Walker argued the government had taken too narrow a definition of the software market, and described some of its evidence submitted during the case as "vague".

"This decision puts the onus squarely on the board of PeopleSoft to meet with us so that the shareholders can accept our offer," said Mr Henley.