Oracle Won't Budge Off Original BEA Offer; Bid Expires Sunday - InformationWeek

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10/25/2007
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Oracle Won't Budge Off Original BEA Offer; Bid Expires Sunday

BEA had rebuffed Oracle's Oct. 9 initial offer as 'undervaluing' the company.

Oracle president Charles Phillips termed BEA Systems' request for $21 a share Thursday "an impossibly high price," and stood by Oracle's first offer of $17 a share.

In letters traded Thursday, BEA's board of directors sought a $4 per share increase in Oracle's bid in the morning, and Oracle refused any increase by the end of the day. The swift exchange appears to be the first two moves of the end game in Oracle's effort to acquire the middleware company.

In addition to standing by its bid, Oracle asserted that there was no other bidder for BEA and repeated its plan to let its bid expire at 5 p.m. Pacific time Sunday, if it's not accepted.

BEA had rebuffed Oracle's Oct. 9 initial offer, valued at $6.7 billion, as "undervaluing" the company.

"We urge the BEA Board to put our $17 per share proposal to the stockholders for a vote. But if BEA's objective is to remain independent, then the $21 per share counterproposal is a perfect strategy," responded Phillips.

After 5 p.m. PDT Oct. 28, Phillips continued, "Oracle will move on and evaluate other potential acquisitions."

Bart Narter, an analyst with financial research firm Celent, said IBM was unlikely to bid for BEA because BEA's product line "competes more than complements" the IBM WebSphere middleware product set.

SAP has already taken itself out of the running as a potential bidder, having just announced its plan to purchase Business Objects for $6.8 billion. Besides, SAP is committed to its NetWeaver application server and middleware and "has sufficient uptake [of NetWeaver] in the market that it would not be interested in switching to BEA technology," Narter said in a written comment on Oracle's bid.

Hewlett-Packard, he continued, "has no compelling reason" to buy BEA and "hasn't shown the appetite to purchase or build SOA software" in the past.

"BEA is a natural fit for Oracle, and I would be surprised to find someone who would outbid them," Narter wrote. "HP may kick the tires... [but] Oracle ultimately seems to be the best match."

Earlier Thursday, David O'Connell, an analyst at IT consulting company Nucleus Research, predicted that Oracle and BEA "will find a number in the middle" of their two positions.

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