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By Declan McCullagh, 11 October 2004 07:10

NEWS Oracle CEO Larry Ellison testified on Friday that he and his board of directors came close to a merger with PeopleSoft in 2000, and had expected that last year's takeover bid would have been accepted within a matter of weeks.

Ellison indicated that he had never anticipated the roadblocks that PeopleSoft's then-CEO, Craig Conway, would put in place to thwart the proposed acquisition. Those roadblocks included a lobbying campaign to persuade state governments and the US Department of Justice to block the deal, the adoption of a "poison pill" scheme, and the filing of a lawsuit that temporarily derailed the proposed purchase.

The Justice Department last week conceded defeat, saying it would not appeal a court ruling that said Oracle could continue with its merger plans.

As for Oracle's offer for PeopleSoft, Ellison said: "There have been discussions about raising the price," but also "there have been more discussions about lowering the price."

On Thursday, an Oracle board member testified that the company's current $21 per share offer might not be its last. Earlier in the week, a PeopleSoft board member testified that a sale would be possible if Oracle were to boost its offer and if there were a "high certainty" that the deal could close quickly.

At one point, Oracle had raised its offer to $26 per share, but then lowered it to $21 in part because the tech industry overall had slumped, Ellison said.

Ellison compared Oracle's bid for PeopleSoft to IBM's initially hostile bid for Lotus Development nearly a decade ago, which ended in friendly talks. He said that Oracle expected its PeopleSoft bid, launched in June 2003, to follow suit.

"Most hostile takeover bids end up in friendly negotiations," he said. "[We] expected the offer to come down to negotiations between us and PeopleSoft."

"I thought this thing was going to happen very quickly - shows what I knew," Ellison added.

Ellison's testimony during the trial, which began Monday in Delaware Chancery Court, is designed to show that Oracle's bid was sincere and that PeopleSoft's board and management did not act in the best interests of shareholders when rejecting it and adopting anti-takeover defences. Oracle has filed suit to eliminate those defences, which represent some of the few remaining obstacles to the purchase.

Conway, who was fired the week before, in part over his statements to analysts related to the takeover bid, took the stand earlier in the week and admitted to vilifying Oracle's proposed buy. He also defended comparisons of Ellison to Genghis Kahn.

Ellison said Friday that he had no personal animus toward Conway and that he disagreed with the decision to fire the former Oracle executive in the early 1990s. Conway was one of the company's top salespeople.

The 2000 talks about the potential purchase were started by Conway, Ellison said, but failed when the PeopleSoft executive insisted on running the combined application software company. Conway "made it very clear that he was not interested in a merger unless he was running the combined company, period," Ellison testified.

Since 2003, when Oracle made its first public bid, both sides have been locked in an often fierce battle. Among the salvos that PeopleSoft has fired at its rival is a charge that if Oracle were to succeed in its acquisition effort, it would be quick to do away with PeopleSoft's products.

On Friday, Ellison disputed that charge.

"They were constantly lying to their customers, they were mischaracterising what we were doing, they were saying we were going to kill the product," Ellison said. He said discontinuing PeopleSoft's products would be a "terrible idea" that would waste billions of dollars and get him fired by his board.

Declan McCullagh writes for CNET News.com