Oracle brazened it out and claimed it still has a shot. It trotted out one of its lawyers to say that there have been many instances of the Assistant Attorney General bucking his staff.

Oracle spokesman Jim Finn blamed PeopleSoft CEO and ex-Oracle executive Craig Conway.

"The initial proposal to merge PeopleSoft's applications business with Oracle's applications business," Finn's statement said, "came from PeopleSoft CEO Craig Conway, who proposed that he was the best person to run the combined companies' applications business and never mentioned any antitrust concerns. However, when Oracle countered by proposing to buy PeopleSoft, Conway said that he wouldn't sell at any price. He then began a long and intensive lobbying effort aimed at persuading the Antitrust Division of the US Department of Justice to block the deal. PeopleSoft's lobbying resulted in complicating and prolonging the Justice Department review of the merger. While no decision has yet been made, Oracle believes this merger will eventually be approved."

The market thinks Oracle's dreaming. Otherwise everybody appears to be betting that Oracle is going to arm wrestle the Justice Department for the privilege of buying PeopleSoft or take the agency to court.

One might at this point reflect on the fact that Oracle CEO Larry Ellison was one of those to set the antitrust dogs on Microsoft and that he now has to fend one off himself. Conway evidently sold the DOJ investigators on a narrow definition of the market and the chance of higher prices.

Right before the DOJ news, the PeopleSoft board had its usual knee-jerk reaction to Oracle's sweetened offer of $9.4 billion, $26-a-share, and turned it down claiming, as it has before, that it's worth more than that and, anyway, it's anticompetitive.

Barring Pate turning thumbs down and an Oracle retreat, PeopleSoft's unqualified rejection leaves Oracle with its plan to grab control of the PeopleSoft board at the stockholders meeting on March 25. The hurdle after that would be PeopleSoft's poison pill and the growing noise that Oracle is paying way too much.

If it got the company, it would evidently have to pay, maybe, $1.5 billion to cover those refund liabilities PeopleSoft has run up so the real price is more like $11 billion.

According to First Call, Oracle's $26 bid, which Oracle claimed last week was the highest it's willing to go, is in line with what Wall Street on average thinks PeopleSoft will be worth in a year. A few of the more optimistic brokers think it could go to $30, while the pessimistic think it could drop to $17.

Given that PeopleSoft shares haven't moved above $23 since Oracle upped its offer, it's assumed the market figures the deal is dead.

In rejecting Oracle's bid, PeopleSoft claimed that its stock is trading at the low end of its historical value based on forward earnings because of the uncertainty that Oracle has created. With a historical multiple based on its 2004 earnings, PeopleSoft claimed the company's true value "far exceeds the offer price."

"Don't underestimate the significant additional value PeopleSoft can create once the disruption from Oracle's hostile activities has ended," PeopleSoft said in a statement. It didn't venture to say what multiple its conjectures were based on. It did say that it believed Oracle was out to damage PeopleSoft to acquire it at "an unreasonably low price."

Oracle, in turn, defended its price saying, "Given PeopleSoft's uncertain future as a standalone company and the fact that, for the first quarter, PeopleSoft guided analysts below the consensus estimates, Oracle believes that its offer is full and generous." It told PeopleSoft stockholders to think for themselves and tender their shares.

PeopleSoft said its bankers Citigroup Global Markets and Goldman Sachs thought the Oracle offer was "inadequate."

An Oracle deal would be worth something like $200 million to PeopleSoft CEO Craig Conway.

PeopleSoft's stock dropped 2% to $22 and change when the news of PeopleSoft's continued

• Ellison Triumph: Oracle Can Proceed with PeopleSoft Takeover Bid, Court Decides
• Oracle's PeopleSoft Takeover Bid Can Go Ahead, Judge Rules