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Attorneys General Discuss Oracle's Plans

Posted on: Tuesday, 24 June 2003, 06:00 CDT

By DAVID KOENIG

DALLAS (AP) -- Attorneys general from Texas, California and other states held a conference call Tuesday to discuss whether to oppose Oracle Corp.'s hostile takeover bid for PeopleSoft Inc. on antitrust grounds, according to two officials familiar with the situation.

During the call, state representatives discussed building a legal case against the takeover - including the potential cost to PeopleSoft customers, according to one of the officials. Both officials spoke on condition of anonymity.

The Texas Attorney General's Office, which helped set up the call, declined to provide details of the discussion or say how many states took part.

"Today's conference call is a first round, routine call to discuss the concerns of the states," said Jane Shepperd, a spokeswoman for Texas Attorney General Greg Abbott. "We take great interest any time a situation threatens competition and puts the customer, whether an individual or government entity in jeopardy of paying higher prices for a particular product."

A spokesman for California Attorney General Bill Lockyer said the state was evaluating the impact a merger of two large software-application companies would have on state government customers. California officials "have no plans at this point to intervene," said the spokesman, Tom Dresslar.

Last week, the Connecticut attorney general filed an antitrust lawsuit to block Oracle's proposed $6.3 billion takeover of a rival business-software maker. Connecticut is trying to enlist other states to join its lawsuit.

Connecticut Attorney General Richard Blumenthal, in an interview Tuesday, predicted "intense and significant antitrust scrutiny of this transaction by the states."

The PeopleSoft board has twice rejected Oracle's offer and is instead pursuing a $1.75 billion purchase of another business software company, Denver-based J.D. Edwards & Co. PeopleSoft's campaign to derail Oracle's takeover attempt could be greatly strengthened if more states erect antitrust barriers against the deal.

PeopleSoft makes software applications widely used by government agencies. State officials are worried that Oracle would stop supporting the software and that the merger would lead to less competition and higher prices.

When it launched its bid for PeopleSoft, now at $19.50 per share, Oracle said it would end development of PeopleSoft products and try to shift customers to Oracle products, but the company has softened its tone in recent days.

Oracle chairman and chief executive Larry Ellison said Tuesday that his Redwood Shores, Calif.-based company would continue to support already-installed PeopleSoft applications and improve the products for at least 10 years. He said Oracle would not limit the functionality of PeopleSoft products.

"We will continue selling PeopleSoft products," Ellison said. "We will give (customers) the option to move to Oracle's (applications line) or keep PeopleSoft."

Oracle has said the acquisition of PeopleSoft would allow it to better compete against rivals, including Germany's SAP AG (SAP), easily the largest business-software maker.

PeopleSoft spokesman Steve Swasey said Oracle's takeover could particularly affect government agencies: More than 1,000 of PeopleSoft's 5,100 customers are in the government and education sector, including agencies in 15 states from California to Texas to New York.

"The cost to them would be in the billions of dollars" if forced to switch software applications, Swasey said. "That's money that comes straight from taxpayers."

PeopleSoft shares rose 5 cents to close at $17.90, and Oracle shares fell 12 cents to $12.65 in Tuesday trading on the Nasdaq Stock Market.

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