Oracle has delivered an ultimatum to BEA Systems that it must either accept Oracle's bid of $17 per share or it will be withdrawn Oct. 28. Oracle is seeking to avoid "a long, drawn-out process to acquire BEA," it warned.
BEA's board of directors has twice rejected the bid.
"The board has refused to meet with us since we made our Oct. 9th proposal," noted Oracle president Charles Phillips in a letter sent to BEA's board Tuesday morning. In a response to the initial bid, Bill Klein, BEA's VP of business planning and development, said the company was concerned about disclosing information to a competitor in a protracted takeover discussion.
"Oracle believes that our $17 per share price is generous and there are no offers for BEA above $17 per share," Phillips continued in the letter. The $17-per-share price values BEA at $6.7 billion.
The BEA board was urged to accept the offer and let shareholders vote on whether they wanted to accept Oracle's bid. Carl Icahn, an activist billionaire investor, owns 11%, or 43.3 million shares, of BEA stock. On Sept. 14, Icahn called for the sale of the company to a strategic investor, such as Oracle, according to The Associated Press. BEA shares traded between $10.50 and $16.77 over the 12 months prior to Oracle's Oct. 9 bid.
It was trading at $17.85 a few hours after Oracle delivered its letter Tuesday morning, indicating traders were still betting a second offer would push the price higher. It had closed at $14.05 the day before Oracle's bid.
"Oracle has no interest in a long, drawn-out process to acquire BEA. If the BEA board refuses to execute an acquisition agreement and refuses to let shareholders vote, then our $17 per share proposal will expire at 5 p.m. PDT on Sunday, October 28, 2007," the letter stated.
In BEA's initial response, the board of directors indicated that the company's lack of financial reporting over several quarters resulted in outdated financial information on the record and the company being undervalued in the public eye.
"BEA is worth substantially more to Oracle, to others, and, importantly, to our shareholders than the price indicated in your letter," the board of directors responded to the Oct. 9 offer.
BEA is being threatened with delisting by Nasdaq because it hasn't been able to report its quarterly earnings for several quarters, because of the need to restate its earnings for the past 10 years as a result of irregular stock option dating. That dearth of reporting "limits investor visibility into our performance. We expect that this will be corrected in the near future," the board responded.
Current financial information will have the effect of increasing BEA's value in the marketplace, the response indicated.
Oracle's public bid letter indicated that it expected the two companies would "proceed ... to a process" of completing the acquisition, based on earlier talks. But the BEA board responded, "We are very sensitive to the fact that Oracle is a direct competitor. Therefore, the board cannot consider any process which is long in duration, open-ended in nature, or would divulge competitively sensitive information which could materially harm our business."