BEA to Oracle: We're not opposed to a reasonable offer
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BEA Systems has told Oracle the two companies can still make a deal -- just not the one on the table.
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'This will hurt you more than it hurts me' Oracle let its $17 per share offer for BEA lapse yesterday, but activist investor Carl Icahn has demanded the middleware firm put the offer to shareholders anyway.â¦
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Given the silence from the BEA Systems and Oracle camps early this week about Oracle's unsolicited proposal to buy its middleware rival, the community at large can only sit back and guess what might be the next scene in this drama.The two companies have been keeping quiet since last Friday's blockbuster revelation that Oracle was seeking to acquire BEA for $17 per share, or about $6.7 billion. Both have spurned requests this week for media briefings to elaborate on the issue.Undoubtedly, much is taking place behind the scenes, as aggressive Oracle seeks to add BEA to the impressive list of formerly independent companies it has acquired, which has included, among others, PeopleSoft and Siebel Systems. BEA, meanwhile, also has to be pondering its next step.Officials at Sun Microsystems, which invented the Java platform that serves as the backbone of many BEA and Oracle products, seemed to be caught off-guard when asked about the proposed merger at a Sun event in San Francisco on Tuesday evening.Chuckling, Rich Green, Sun executive vice president of software, suggested contacting Oracle CEO Larry Ellison about the matter. But when asked what impacts might be felt by the Java platform itself, Green did not see any negative effects."They're both Java supporters," Green said. "I think it's neutral to Java. I think it's just fine."Sun's James Gosling, a founder of Java and chief technology officer for Sun's client software group, concurred. "They're both big supporters of Java. I don't think it's going to have much effect one way or the other," Gosling said.Oracle has pledged to protect investments customers have made in BEA products. While Oracle's move has been characterized in some circles as a hostile takeover attempt, BEA's initial response merely said the Oracle offer undervalued the company.Major BEA stockholder Carl Icahn has been prodding for a sale of BEA, prompting one BEA insider to suggest Icahn did not have enough shares and would have a hard time getting control of the BEA board of directors in order to make the sale happen. Now, Oracle has forced BEA's hand. If history is any indication, the sale is likely to happen. PeopleSoft opposed Oracle but eventually succumbed."We certainly saw how persistent Oracle was in chasing PeopleSoft," said Dennis Callaghan, enterprise software analyst at the 451 Group, who expects the merger to be completed.Options for BEA to resist Oracle may be limited. To take the company private and avoid a merger, BEA would need to find a private equity partner, Callaghan said. And then there is Icahn, owning a significant stake in the company and wanting the company sold."It's not like [BEA CEO and co-founder] Alfred Chuang can regain control of the company and take it private. He's got to make his shareholders happy," said Callaghan.Even BEA employees could profit on a merger if they bought stock at a discounted price and then were able to sell it at an inflated price as a result of a merger, he said.? They might lose their jobs at BEA, but a lot of them would be very employable, winding up with startup ventures, he said.Callaghan added he expects Oracle to increase its offer. HP is a possibility as another potential buyer for BEA, but HP has had troubles of its own integrating acquired companies, such as Peregrine and Bluestone Software, Callaghan saidHe gave credence to the notion that Oracle may be buying BEA to stock up on its middleware offerings as the database market, which has been Oracle's cash cow, now features free, open source offerings from competitors.? "From what I understand, [databases is] not really a growing business at this point, Callaghan said.A dignitary in the Java development space had a mostly positive reaction to the proposed merger."Oracle and BEA both have amazing engineering teams, but Oracle's business operation is clearly many, many times the size and scale of BEA's," said Rick Ross, founder of the Javalobby Web site for Java developers. Having both teams under the same umbrella would create great opportunities for innovation, Ross said. And BEA's technology, such as the JRockit Java Virtual Machine, could become more widely used, he said.But there could be a down side, Ross noted."As the realized market share of a single player moves to such a dominant position, it becomes less and less likely that the startup innovator can gain a foothold," he said.IBM, BEA, and Oracle are battling in what research firm IDC calls the application deployment software space, which is comprised of application servers, integration software, message-oriented middleware and transaction processing monitors. This market space, valued at $9.4 billion in 2006, is growing at nearly 18 percent year over year because of trends in integration, business process management, and SOA, said Maureen Fleming, IDC program director.When including software mainframes, IBM last year had a 36 percent market share, valued at $3.3 billion. BEA trailed with 11 percent or $1 billion, and Oracle had 9 percent, or $850 million. The figures include license and maintenance revenuesWhen leaving out mainframe software, the market size dropped to $6.5 billion, with IBM still leading with a 20 percent market share, or $1.3 billion and Oracle garnering 13 percent or $850,000. BEA came in right behind Oracle with 12 percent or $840,000.
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Business software maker BEA Systems Inc. has said it will let Oracle Corp.'s $6.7 billion takeover bid expire Sunday, intensifying the pressure on management to prove the company is worth more than the offer it's leaving on the table.
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BEA Systems has told Oracle the two companies can still make a deal -- just not the one on the table.Oracle released a statement Tuesday, saying BEA&#39;s board of directors had officially turned down its offer to buy the company. It set a deadline of Sunday at 5 p.m. Pacific time for BEA to accept the $17-per-share bid.But several hours later, BEA fired back its own missive in the form of a letter from William Klein, who is vice president of planning and development, to Oracle president Charles Phillips. In the letter, Klein characterized Oracle&#39;s offer as too low but made it clear BEA is not against being acquired for the right price.&quot;BEA is worth significantly more than $17 to Oracle, to others, and most importantly to BEA shareholders,&quot; the letter said. &quot;BEA&#39;s Board has not indicated that it would be opposed to a transaction that appropriately reflects BEA&#39;s value, reached through a reasonable process.&quot;An Oracle spokesperson did not immediately return a request for comment.The total value of Oracle&#39;s existing bid is about $6.7 billion, and the enterprise software giant said Tuesday it &quot;has no interest in a long, drawn-out process to acquire BEA.&quot;So far, the BEA-Oracle talks have sparked dueling public statements, missed meetings, and shareholder angst, but haven&#39;t been nearly as heated as other merger battles, such as&#160;Oracle&#39;s acquisition of PeopleSoft.Still, it remains unclear whether Oracle will increase its offer for BEA, which it termed &quot;generous&quot; in Tuesday&#39;s statement.&quot;Oracle typically has some [pricing] ratios it uses in its acquisition strategy,&quot; Forrester Research analyst Ray Wang said. &quot;If they really want to dominate the middleware space, this is an acquisition they&#39;d want to make.&quot;If it succeeds in buying BEA, Oracle would swallow up a major competitor in the application server space, a scenario that has had some observers wondering about the fate of BEA&#39;s technologies.Oracle&#39;s move to purchase BEA is only the latest in a string of high-profile buys in 2007. The company has forked over billions for a wide array of enterprise software companies, including business process management vendor&#160;Hyperion Solutions&#160;and application data grid player&#160;Tangosol.BEA has some products that would fill holes in Oracle&#39;s portfolio. But the two companies compete closely on other fronts, such as Web server and ESB (enterprise service bus) offerings.&quot;Those are areas with lots of overlap,&quot; Wang said. &quot;But there&#39;s a lot of good technologies on both sides.&quot;NOTE: This story includes comments from analyst Ray Wang that were also used in a previous update.
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BEA Systems&#39; board of directors has named an acquisition price to competitor and suitor Oracle: $21 a share, $4 more than Oracle&#39;s initial offer.&quot;We continue to believe that&#160;Oracle&#39;s unsolicited proposal to acquire BEA&#160;at $17.00 per share significantly&#160;undervalues BEA, and is therefore not in the best interests of BEA shareholders,&quot; the company said in a statement Thursday.Oracle on Tuesday set a deadline&#160;of Sunday for BEA to accept its &quot;generous&quot; original bid, which totals about $6.7 billion. The company also indicated it had no interest in a protracted merger battle.But BEA declared Thursday that the company&#39;s existing assets and future business prospects dictate a significantly higher sale price. The company said it has customers for its array of enterprise software among 75 percent of the Fortune Global 500, along with $1 billion in cash reserves and no debt.BEA said it arrived at the $21-per-share figure after talking to its financial advisor, Goldman Sachs. The company said it has authorized its attorneys to give a draft merger agreement to third parties willing to meet the price. The agreement would &quot;provide for an appropriately high degree of certainty of closing,&quot; BEA said.A successful purchase of BEA would significantly increase Oracle&#39;s standing in the middleware space. While some BEA assets would help round out Oracle&#39;s offerings, the companies overlap in key categories like Web servers and ESB (enterprise service bus) products.
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Oracle Corp , the world's third-largest software maker, won a three-month-long campaign to buy BEA Systems Inc  by raising its bid for the company by 14 percent to $8.5 billion.
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We've already established what you are, now we're just working out a price BEA blinked this morning and said it would enter takeover negotiations with Oracle, and anyone else thatâs interested, at a floor of $21 per share.â¦
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BEA let the bid's deadline expire, as it promised it would, and Oracle won't rule out another try.
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SAN FRANCISCO, Oct. 26  Â The business software maker BEA Systems signaled its intent to let Oracleâs $6.7 billion takeover bid expire Sunday, setting the stage for a showdown with its largest shareholder, the billionaire investor Carl C. Icahn.
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REDWOOD SHORES, Calif. -- Business software maker Oracle Corp. said Wednesday it agreed to buy BEA Systems Inc. for about $7.85 billion, a compromise price that ends a months-long dispute over the value of the software company.
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SAN FRANCISCO - Oracle Corp. , the third-largest software maker, gave BEA Systems Inc.'s directors five days to consider a $6.7 billion takeover offer before it expires. BEA said it can't accept Oracle's price.
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Just three months after BEA handily rejected its original unsolicited bid, Oracle said it would acquire BEA Systems for $8.5 billion.
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Oracle has rejected&#160;BEA Systems&#39; proposed purchase price of $21 per share, calling it &quot;impossibly high&quot; for Oracle or any other company to pay.In a letter to BEA&#39;s board dated Oct. 25, Oracle again urged the company to accept its offer of $17 per share, an amount that Oracle said it was &quot;unwilling to increase.&quot;&quot;The $21 per share price is a multiple of nearly eleven times BEA&#39;s last twelve months&#39; reported maintenance revenues,&quot; wrote Oracle President Charles Phillips. &quot;Nobody would seriously consider paying that kind of multiple for a software company with shrinking new license sales.&quot;He noted that Oracle was the only company making an offer for BEA. &quot;Apparently no other companies think that BEA is worth $17 per share, let alone $21 per share,&quot; Philips wrote.Oracle again urged BEA to put its offer to a shareholder vote.&#160;Oracle&#39;s bid of $17 per share&#160;values BEA at about $6.7 billion. A price of $21 per share would value it at $8.3 billion.Oracle said it had an obligation to its own shareholders to &quot;exercise price discipline when evaluating acquisition opportunities.&quot; It reminded BEA of its&#160;deadline of Sunday evening&#160;to accept the offer, after which it will &quot;move on&quot; and consider other acquisitions.Oracle made its surprise bid for BEA on Oct. 12, hoping to strengthen its line of middleware products and grow its customer base. BEA, which had been under pressure from investor Carl Icahn to sell, quickly rejected the offer as too low, and on Thursday came back with its suggested higher price. Oracle&#39;s offer &quot;significantly undervalues BEA&quot; and is not in the best interests of BEA&#39;s shareholders, it said on Thursday.BEA officials weren&#39;t available for comment on Oracle&#39;s latest letter.&#160;
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BEA Systems Inc  said on  Thursday it is prepared to sell itself for $8.2 billion, which  is a 24 percent premium to a bid from Oracle Corp  that  the business software maker rejected.
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Oracle has rejected BEA Systems' proposed purchase price of $21 per share.
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After allowing Oracleâs buyout offer to expire on Sunday, BEA Systems defended its inaction in a letter to its largest shareholder, Carl C. Icahn, saying the offer was simply too low.