"The acquisition of PeopleSoft will immediately make Oracle an even more profitable and competitive company," said Oracle chairman and chief executive Larry Ellison, who built the giant specializing in software for the Internet and e-commerce.

PeopleSoft however blasted the offer as an effort to thwart its own acquisition bid for rival J.D. Edwards.

PeopleSoft president and chief executive Craig Conway described the Oracle move as "atrociously bad behavior from a company with a history of atrociously bad behavior."

He added, "Obviously it is a transparent attempt to disrupt the acquisition of J.D. Edwards by PeopleSoft announced earlier this week."

PeopleSoft on Monday announced a friendly takeover for 1.7 billion dollars of rival J.D. Edwards.

PeopleSoft said it has gained market share against Oracle in recent years and its tie-up with J.D. Edwards "was immediately heralded by customers, analysts, computer hardware vendors and systems integrators."

"If anyone needed any further validation of the strength of the J.D. Edwards acquisition, we heard it today from Oracle," said Conway.

PeopleSoft said it is required by law to review all cash offers and that it would shortly provide a recommendation to shareholders.

"In the meantime, PeopleSoft advises its shareholders to take no immediate action" over the Oracle bid.

The bid of 16 dollars a share was a six percent premium to PeopleSoft's recent closing price, but the move sent PeopleSoft soaring 18 percent, up 2.71 to 17.82 at the close of trade.

Earlier, Jeff Henley, Oracle executive vice president, said, "Given PeopleSoft's current prospects and plans, we believe our offer presents compelling value to PeopleSoft shareholders. In addition, we expect that the acquisition of PeopleSoft will increase Oracle's earnings per share from the first combined quarter."

Oracle was noncommital about whether it would proceed with the J.D. Edwards deal if it acquires PeopleSoft.

The Oracle statement said that deal "is subject to several conditions and is not scheduled to be completed until this fall. Once Oracle's acquisition of PeopleSoft is complete, it will review whether, and on what terms, Oracle would support that transaction."

Ellison also said the offer would make Oracle "a credible number two" in the business-management software market behind industry leader SAP of Germany.

Ellison said the idea to buy PeopleSoft was originally proposed about a year ago by PeopleSoft chief executive Craig Conway. Ellison said at that for various reasons, the purchase was not feasible at that time.

Richard Davies, managing director at Needham and Co., said the deal is probably being done out of a realization that significant revenue growth for software companies is not going to come from grabbing market share from competitors.

"It's really hard to grow (revenue) because there's no reason for customers to switch (software) vendors at this point, Davies said. "Big companies realize this, and now investors are just starting to come out to that fact."

Oracle shares dipped 27 cents to 13.04 at the close of trade on Wall Street.

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