Oracle enters intense bidding for BEA
SAN FRANCISCO -- Pouncing on a vulnerable rival, Oracle has offered $6.7 billion to buy BEA Systems in its latest bid to trump SAP AG and IBM in an increasingly intense business software battle.
Oracle unveiled its $17-per-share cash offer Friday, one day after BEA rejected it as inadequate, according to a letter BEA released a few hours after Oracle's revelation catapulted its stock to a new 52-week high.
BEA makes "middleware," products that help software applications run more smoothly on top of databases, while Oracle makes business management and database software.
Oracle's bid represented a 25 percent premium over BEA's closing stock price Thursday.
"It is apparent to our board … that BEA is worth substantially more to Oracle, to others and, importantly, to our shareholders than the price indicated," William Klein, BEA's vice president of business planning and development, wrote in the rejection letter.
In a response to BEA's board, Oracle President Charles Phillips said he had contacted Klein to set up negotiations in hopes of sealing a deal by Monday. But BEA canceled a meeting scheduled for Friday morning, Phillips said, and then Klein told him BEA had little interest in pursuing discussions.
"We are available to proceed immediately with a process that would lead to a friendly transaction," Phillips wrote. He reaffirmed the $17-per-share offer, "provided that the BEA board and management team do not institute any measures which reduce the value of the company."
Industry analysts believe BEA might be able to escape Oracle's clutches by finding a white knight.
Activist investor Carl Icahn, who is using his 13.2 percent stake in BEA to push for a sale, sent a letter Friday to BEA Chairman Alfred Chuang supporting the board's decision to spurn Oracle's offer.
Icahn urged BEA either to put itself on the auction block or to negotiate an alternative deal at a "compelling" price.
SAP, IBM and Hewlett-Packard are considered the most probable candidates to vie for BEA.
"There should be competition for this one," predicted Forrester Research analyst Ray Wang. "IBM and HP need BEA a whole lot more than Oracle does."
SAP, IBM and HP all declined to comment on the speculation.