Oracle’s proposal to acquire BEA systems, an enterprise infrastructure software provider, expired on 28 October 2007. Oracle is one of the largest providers of enterprise software and has already made 10 acquisitions in 2007.
Oracle proposed to acquire BEA for $17 per share earlier this month. On October 25, 2007, BEA announced that it was prepared to talk about a sale of the company to Oracle or any other potential bidders at a price of $21 per share, $4 higher than Oracle’s offer.
An Oracle spokespersons said, Over the last twenty days, the BEA Board has repeatedly rejected our offer and refused to meet with us, even though we offered to meet without any preconditions. We asked the BEA Board to allow their shareholders to vote on our $17 per share proposal. They chose not to. If the BEA shareholders are unhappy with the behavior of the BEA Board it is up to those shareholders, not Oracle, to take the appropriate action.
We will continue to vigorously oppose a sale to Oracle at $17.00 per share, said a BEA spokesperson.
BEA backed its proposal by claiming market leadership in enterprise infrastructure software, a customer base accounting for 75% of the Global 500, and a strong balance sheet, with over $1bn in cash and no debt. BAE also claimed that its $21 valuation was based on analyst estimates as to the value of previous acquisitions by Oracle and other players in the software industry.
We believe that your counterproposal at $21 per share price is an impossibly high price for Oracle or any other potential acquirer, wrote Charles Phillips, president of Oracle to BEA.
Further, Oracle, in its press release has said, BEA shareholders should not assume that Oracle will renew its $17 per share offer in the future.
Over time many things can change: BEA’s business might materially weaken, the stock market can fall further from its recent record highs, or Oracle may have committed its capital elsewhere, Oracle said.
Carl Icahn, BEA’s largest investor, has been pushing BEA to put itself up for sale. However, last month, Kevin Faulkner, senior vice president of investor relations at BEA said, the company planned to remain independent to better serve customers.
Oracle has made 34 acquisitions since 2005 and has been pursuant in many of those, including the 18-month bid process with PeopleSoft, which ended with Oracle’s acquisition of PeopleSoft in 2005. Oracle made repeated offers with different buyout prices, from $19.50 and to a closing price of $26.50 per share (or more than $10 billion) for PeopleSoft.
SAP’s name came up as a possible alternative suitor for BEA. However, Henning Kagermann, Chief Executive Officer of SAP said in an interview, SAP would not make a counteroffer for BEA following Oracle’s bid last week to buy the company for $6.7 billion.
