PeopleSoft poised to buy back own spin-off

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It looks increasingly likely that US applications firm PeopleSoft is about to buy back Momentum Business Applications for around $65 million, a move which will enable it to avoid paying software royalties.

PeopleSoft has an outstanding option to buy Momentum or pay be faced with the prospect of paying a 10 per cent royalty for the next ten years to use software developed by the company which PeopleSoft itself created in 1998 to vary its software development costs. This was legal at the time but has now been outlawed by the US Financial Accounting Standards Board.

A decision will be made in the next few weeks.

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