Oracle Corp. won permission from an American judge to proceed with its $7.7 billion hostile bid for PeopleSoft Inc., reviving a battle that PeopleSoft said drove customers to competitors.

PeopleSoft shares jumped 15%.

Oracle founder Larry Ellison prevailed in a court fight against the U.S. Justice Department, which sued to stop the bid, saying it would quash competition. The purchase would eliminate Oracle’s closest competitor and vault the company to no. 2 from no. 3 among providers of business applications software.

U.S. District Judge Vaughn Walker’s decision, after a four-week trial in San Francisco, removes one of the biggest hurdles to the bid. PeopleSoft’s chief executive, Craig Conway, fought Oracle’s offer, describing it as an attempt to “kill” the company.

“They still have a lot of hurdles they have to get over such as getting E.U. approval and getting PeopleSoft to buy in, so it doesn’t necessarily mean its a done deal, but it’s a step that way,” said an analyst at Key Corp’s Victory Asset Management in Cleveland, Marty Shagrin. The firm manages $50 billion and owns Oracle and PeopleSoft shares.

PeopleSoft spokesman Steve Swasey declined to comment immediately. Gina Talamona, a spokeswoman for the Justice Department, didn’t return a message left on voice mail.

Pleasanton, Calif.-based People-Soft’s shares jumped to $20.56,near the offer price of $21 a share, in extended trading after the ruling. They rose 46 cents to $17.95 in regular Nasdaq Stock Market trading.

“This decision puts the onus squarely on the board of PeopleSoft to meet with us and to redeem their poison pill so that the shareholders can accept our offer,” the chairman of Redwood City, Calif.-based Oracle, Jeffrey O. Henley, said in an e-mailed statement.

Oracle still needs approval from PeopleSoft shareholders and European regulators to complete the takeover. PeopleSoft’s board has rejected the offer four times since Oracle started the hostile bid in June 2003.

The U.S. may appeal Mr. Walker’s ruling to the 9th U.S. Circuit Court of Appeals or the U.S. Supreme Court. Walker stayed his order for 10 days to permit an appeal.

During a month-long trial in June, the U.S. said the merger would reduce competition in the $500 million-a-year American market for software that automates financial and human resources tasks at large, multinational corporations.

“From the beginning, the case looked odd. I thought the Justice Department was gerrymandering the market definition,” said an antitrust attorney not connected to the case, William White. “I’m surprised this case went as far as it did. It didn’t seem like a very powerful case for the Justice Department from the beginning,”

Oracle told Mr. Walker during the trial that the market for business software has many competitors, including Microsoft Corp., International Business Machines Corp., outsourcing companies and specialty software makers such as Lawson Software Inc.

“There are more and more competitors pushing our prices down,” Mr. Ellison, 60, testified at the trial.

Pleasanton-Calif.-based PeopleSoft lost more than $100 million, according to the company’s chief executive, Craig Conway. He said customers have delayed purchases because of uncertainty over whether the company would remain independent.

The company reported in July that second-quarter profit dropped 70% and that it will miss its 2004 profit and sales forecasts. PeopleSoft’s shares have fallen 19% since the Justice Department sued to block the merger in February.

Oracle disclosed during the trial that it estimated it may cut 6,000 jobs after buying PeopleSoft and raising software maintenance fees for the company’s customers.

Microsoft, the world’s largest software company, disclosed during the antitrust trial that it held and ended talks with SAP about an acquisition after Oracle announced its PeopleSoft bid. IBM, which competes with Oracle for database-software sales, also considered acquisitions after the announcement, according to documents disclosed at the trial.

The case is United States v. Oracle Corp. 04-00807, U.S. District Court, Northern District, San Francisco.