The Redwood Shores, Calif.-based database software vendor said it has revised its tender offer for all of the outstanding shares of PeopleSoft to $21 per share, or approximately $7.7 billion. Previously, Oracle was prepared to shell out $26 per share, or $9.4 billion, for its rival.

"Given the significant antitrust obstacles in both the United States and Europe, we do not believe Oracle's bid can be completed at any price," PeopleSoft said in a prepared statement. "We note that Oracle has timed this announcement on the eve of our annual Leadership Conference, our most significant customer event for senior executives, with more than 2,500 attendees. This is one more instance of what we firmly believe is Oracle's ongoing effort to damage our business."

The acquisition banter will all be for naught should a lawsuit by the U.S. Department of Justice and ten states prevail. The trial is scheduled to begin on June 7 at the U.S. District Court in San Francisco and is expected to last six weeks.

Earlier in the day, Oracle president Chuck Philips told New York investors that the company should know for sure by August whether or not it will be able to pursue PeopleSoft in any sort of capacity. If so, he said, the purchase would be quick and wrapped up by the end of the year.

The two sides are scheduled to give the judge a technology tutorial on May 21. The government's argument is that the merger between two major enterprise software providers would be anti-competitive and limit customers' choices to just Oracle and the German market leader SAP.

"For its part, the DOJ's toughest task will be to justify preventing a company from becoming a more effective competitor against a dominant rival," Rob Christopher, head of litigation for the law firm Coudert Brothers, told internetnews.com. "Throw in the politically incorrect but possibly influential distinction that the applicant now is an American company and the dominant rival is European, and there could be a judicial perception that this move would be net pro-competitive. On balance, however, I believe in the power and magic of threes. This particularly applies to competitive dynamics in otherwise relatively concentrated markets. I do not expect the court to disrupt that magic here. My money is on the DOJ."

Still, Oracle faces a potentially tougher challenge from the European Commission, which is investigating the anti-competitive claims but has yet to issue its formal opinion. Even after that, a federal judge has set November 1 as the trial date for PeopleSoft's legal case against Oracle. PeopleSoft claims Oracle's advances amount to unfair business practices, trade libel and tortuous interference. A mountain of obstacles to be sure for Oracle, according to Melanie Hollands, president of Koala Capital, a hedge fund that focuses on technology stocks.

"There's a 10 to 15 percent chance Oracle prevails in the early rounds. There is a 25 percent chance that Ellison gets tired of messing around and drops it," Hollands told internetnews.com. "The company's apps development efforts are in a high state of confusion, and the best solution is simply to focus on what needs to be done, that is, drop the takeover bid. However, doing so would force people at Oracle to recognize that it has a tier two-ish solution , which is not what it wants. So the games continue."

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