Friday, October 12, 2007

Oracle Letter Proposes to Buy BEA Systems for $17.00 per Share in Cash

The official Oracle press release (excerpt):

Oracle Corporation (NASDAQ: ORCL) today confirmed that it delivered a letter to the Board of Directors of BEA Systems, Inc. (NASDAQ: BEAS) on October 9 in which Oracle proposes to acquire BEA for $17.00 per share in cash. The $17.00 per share offer is a 25% premium over yesterday's closing price of $13.62.

The letter indicates that Oracle is prepared to proceed immediately to a process that leads to a definitive agreement. "We have made a serious proposal including a substantial premium for BEA," said Oracle President Charles Phillips. "We believe our all cash offer provides the best value for BEA's shareholders and the best home for BEA's employees and customers. This proposal is the culmination of repeated conversations with BEA's management over the last several years. We look forward to completing a friendly transaction as soon as possible."

My quick take:

1.  BEA and Oracle will likely do a posturing dance for a while, on price and terms, and then the deal will happen -- in large part because, as Carl Icahn and others have observed, the future doesn't look so bright ahead for BEA as an independent company.  It's certainly Possible IBM will try to trump Oracle's bid, but I suspect Oracle has more leverage -- and also a surprisingly strong track record, during the last few years, for not wrecking acquired companies/teams/products.

2.  Oracle + BEA is a much more significant competitive threat -- especially to IBM and Microsoft -- than Oracle and BEA were independently (when, among other things, Oracle and BEA were arch rivals).

3.  Oracle + BEA will dominate the "Java platform" infrastructure market -- with stark competitive implications for other Java-centric players, especially IBM and Sun.

Oracle Letter Proposes to Buy BEA Systems for $17.00 per Share in Cash

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