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

Authorities in Connecticut, meanwhile, said they would sue Oracle to halt the takeover bid on antitrust grounds. PeopleSoft has already launched legal action against Oracle.

The clash between Oracle and PeopleSoft is shaping up as the most acrimonious, bitterly fought takeover battle in the technology world since the Internet bubble burst three years ago.

Oracle increased its bid to 19.50 dollars a share from the initial offer of 16 dollars, two days after PeopleSoft rejected the bid and reaffirmed plans to merge with rival business software group J.D. Edwards.

"In the last few days, Oracle executives have had the opportunity to speak with the holders of a majority of PeopleSoft shares," Oracle chairman and chief executive Larry Ellison said in a statement.

"Many of those shareholders indicated the prices at which they would tender their shares. Therefore, Oracle is raising its all-cash offer to 19.50 dollars per share," Ellison said.

"Oracle remains committed to acquiring PeopleSoft and will not be deterred by management's maneuvers to maintain control of a company they do not own," he said.

PeopleSoft issued a statement advising its shareholders to take no action until it had time to study the revised offer.

On Monday, PeopleSoft announced it was speeding up its plans for a 1.75-billion-dollar, friendly takeover of J.D. Edwards.

It threw in 850 million dollars cash as part of the formerly all-stock offer and removed the need for a vote by PeopleSoft shareholders so long as 90 percent of the J.D. Edwards stock is acquired.

Oracle said it was filing suit Wednesday in Delaware against PeopleSoft, its board of directors and J.D. Edwards for trying to remove PeopleSoft's shareholders' ability to accept its takeover offer.

The group said it will argue "that PeopleSoft and its board breached their fiduciary duties, including failure to act in the best interest of PeopleSoft's shareholders."

Oracle also demanded that PeopleSoft remove a "poison pill," a tactic in which a company gives shareholders the right to many new shares, making it too expensive for a predator to buy them.

Oracle chief financial officer Jeff Henley said his company's revised offer for PeopleSoft would still result immediately in higher earnings for Oracle shareholders, after excluding the cost of writing off the excess price paid for PeopleSoft.

Within a year, the takeover would boost earnings even under standard accounting rules, he said.

The US state of Connecticut tried to block the deal. It said it was filing suit in the US District Court at Hartford, Connecticut, alleging an Oracle takeover would flout antitrust laws resulting in harm to the US economy, consumers and competition.

"We are assembling a powerful coalition of states and other consumers that will suffer the same unacceptable costs if this unlawful, anti-competitive takeover is permitted," Connecticut Attorney General Richard Blumenthal said in a statement.

"The takeover would cripple competition, threatening higher prices and lower quality and cause terrible waste in the human and financial investments already made," he said.

PeopleSoft shares shot up 91 cents or 5.29 percent to 18.06 dollars by late afternoon. Oracle rose six cents to 13.41 dollars. J.D. Edwards climbed 25 cents to 14.14 dollars.

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