M&A

Resistance Is Not Futile, for BEA

Oracle finally gobbles up the hot software property by lifting the price to $8.5 billion, nearly four months after the first bid was rejected.
Stephen TaubJanuary 16, 2008

After three months of negotiations, Oracle Corp. struck a deal to acquire BEA Systems for about $8.5 billion, including $1.3 billion of cash on hand at BEA.

The $19.375-a-share price, which offers a premium of 24 percent over the BEA Tuesday closing price, also represents more than a $2 boost from the price Oracle offered last October, when BEA rejected the combination.

“We expect this deal to be accretive to Oracle’s earnings by at least one-two cents on a non-GAAP basis in its first full year after closing,” said Oracle President and Chief Financial Officer Safra Catz.

“The addition of BEA products and technology will significantly enhance and extend Oracle’s Fusion middleware software suite,” said Oracle CEO Larry Ellison.

The deal vindicates the decision by BEA management to hold out for more after a Oracle submitted its unsolicited offer of $17 per share, or $6.7 billion, last fall.

When the deal closes, Oracle would further solidify its leadership position in the software that underlies Corporate America’s business transactions. Indeed, Oracle has spent the past three years shelling out about $25 billion to buy more than 35 companies, including Hyperion Solutions and PeopleSoft, in its plan to overtake SAP in sales of business applications, according to published reports.

BEA is considered a leader in “middleware,” which helps a company’s various applications run together. BEA’s software supports such business activities as billing, supply-chain management, and securities trading by bridging those programs with such back-end systems as databases. Its customers crave its software for helping them conduct more transactions over the Internet.

There had been speculation that such companies as IBM or Hewlett-Packard, in addition to SAP, were considering making their own competing bids for BEA.

“Oracle Fusion middleware has an open “hot-pluggable” architecture that allows customers the option of coupling BEA’s WebLogic Java Server to virtually all the components of the Fusion software suite,” said Ellison. “That’s just one example of how customers can choose among Oracle and BEA middleware products, knowing that those products will gracefully interoperate and be supported for years to come.”