Siebel Systems and BEA were examined as potential takeover targets by Oracle before it launched its hostile $7.7bn bid for PeopleSoft, Oracle chief executive Larry Ellison testified yesterday in a videotaped deposition.

The deposition, recorded in January, was played in a federal courtroom in San Francisco where the US Justice Department is aiming to block Oracle's $7.7bn takeover of PeopleSoft.

Ellison said that Siebel Systems' chief executive, Tom Siebel, came to his house and tried to sell him Siebel Systems. Siebel used to work for Oracle before he started his CRM company, and both he and Ellison live in the affluent town of Woodside in Silicon Valley.

Ellison noted, however, that Siebel would be his second choice, making the company an attractive acquisition target only if the PeopleSoft acquisition failed. He considered PeopleSoft a better fit for Oracle's needs.

The DoJ argues that the acquisition would damage competition in the enterprise software market as it would leave only Oracle and SAP as serious players and cause software prices to rise.

But in his deposition Ellison stressed that he needed the PeopleSoft acquisition to get enough scale to compete with Microsoft and IBM.

He also said that JD Edwards had been considered a takeover target. PeopleSoft's acquisition of JD Edwards last June sparked Oracle's bid for PeopleSoft.

Oracle lawyers unsuccessfully tried to prevent parts of the deposition, including the names of takeover candidates, from being played in open court.

They claimed that it would cause speculation about the company's merger and acquisition strategy.