Oracle Completes PeopleSoft Acquisition for $10.3 Billion After Defeating Antitrust Challenge

Oracle Corporation completed its acquisition of PeopleSoft on December 13, 2004, for approximately $10.3 billion ($26.50 per share), concluding an 18-month hostile takeover battle after defeating the Department of Justice’s antitrust challenge. The final purchase price represented more than double Oracle’s initial $5.1 billion offer from June 2003, demonstrating PeopleSoft’s successful resistance strategy that forced Oracle to pay a substantial premium.

In September 2004, U.S. District Judge Vaughn Walker rejected the DOJ’s antitrust lawsuit seeking to block the merger, finding that the government had not proven that the acquisition would substantially reduce competition in enterprise software markets. Following this legal victory, Oracle and PeopleSoft negotiated a definitive merger agreement in December 2004, ending PeopleSoft’s resistance to the hostile takeover.

The acquisition gave Oracle control of both PeopleSoft and JD Edwards, which PeopleSoft had acquired during Oracle’s hostile bid, effectively consolidating three major enterprise software competitors into a single entity. This consolidation substantially reduced customer choices in enterprise resource planning (ERP) and human capital management (HCM) software, leaving primarily Oracle and SAP as the dominant vendors for large enterprise customers.

Oracle’s successful completion of the PeopleSoft acquisition exemplified the limitations of antitrust enforcement in preventing technology sector consolidation. Despite the DOJ’s recognition that the merger would reduce competition, the courts proved unwilling to block the deal, establishing a permissive precedent for future technology mergers. The case demonstrated how aggressive CEOs like Larry Ellison could pursue hostile takeovers, defeat regulatory challenges, and consolidate market power through acquisition rather than innovation.

Following the acquisition, Oracle implemented many of the product discontinuations and support reductions that PeopleSoft had warned about through its Customer Assurance Program, validating concerns about post-merger customer service degradation. The PeopleSoft acquisition established a template for Oracle’s growth strategy: aggressively acquire competitors, consolidate products, lock customers into long-term contracts, and extract rents from reduced competition. This pattern would characterize Oracle’s subsequent acquisitions including Sun Microsystems and numerous smaller enterprise software companies, progressively concentrating the enterprise software market.