A lawsuit would be filed later in the day in US District Court in Hartford, Connecticut, alleging the takeover would flout state and federal antitrust laws, harm the US economy, consumers and competition, they said.

"In filing this lawsuit today, Connecticut is taking the necessary steps to protect our taxpayers," Connecticut Governor John Rowland said in a statement.

"Oracle's hostile takeover bid has the potential to cost the state millions of dollars and is a threat to the progress we have made in recent years in technology improvements" he said.

The decision was announced hours after Oracle boosted its hostile bid for rival PeopleSoft by 1.2 billion dollars to 6.3 billion dollars.

Oracle also announced it would sue PeopleSoft, accused the board of failing to act in the shareholders' best interest, and demanded it remove a "poison pill" obstructing the acquisition.

SPACE.WIRE