Lotus Shares Rise 7.2% on Merger Speculation : Technology: Lotus and Oracle call the reports ‘rumors’ and play down circumstantial evidence.

Shares of Lotus Development Corp. rose 7.2% in heavy trading Wednesday on speculation that the software company is discussing a merger with Oracle Corp.

Company officials declined to comment directly on what they called “rumors” and played down the circumstantial evidence that fueled the speculation.

Lotus shares, which are traded on the Nasdaq, rose $3 to $44.75 on volume of 6 million shares, well above the average daily volume of 1.6 million for the past three months. The shares had been up as much as 9.6% earlier in the session.

Oracle, also traded on the Nasdaq, fell $1.375 to $41.25 on volume of 1.7 million shares, less than a daily average of 1.8 million.

The report of a possible merger surfaced in Computer Reseller News, a trade journal, which noted that senior executives of both companies had been meeting recently.

The article quoted Jeff Matthews, an analyst with RAM Partners, as saying such a merger would give Oracle “the desktop operating system of the future,” a reference to Lotus’ Notes software.

Speculation grew after Montgomery Securities announced that Lotus had withdrawn from the security firm’s high technology stock conference next week. Companies sometimes withdraw from such conferences when they anticipate major announcements.

Lotus officials, however, threw cold water on both reports. Kay Waxman, director of investor relations for Lotus, said the Cambridge, Mass., software company already has an agreement with Oracle to develop its Notes product to work with Oracle’s database software.

“I’m not sure how you can go about positioning these kinds of alliances without these kinds of meetings,” she said.

Waxman also said Lotus never agreed to participate in the Montgomery conference. She said Montgomery incorrectly put Lotus on a list of conference participants and that when the company pointed out the error, Montgomery wrongly said Lotus had withdrawn. Lotus had attended a Montgomery-sponsored conference in September and did not want to participate in two in the same year, she said.

Oracle’s investor relations director, Catherin Buan, noted that the Redwood City, Calif. company will attend the Montgomery conference next week. “We’re getting the slides ready now,” she said.

Although she declined to comment on the merger speculation directly, she did say that Oracle generally has a history of developing technology internally rather than through acquiring companies.

However, Oracle announced Nov. 17 that it would seek to double its authorized shares to 800 million, in part to pay for acquisitions.