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BEA issues counteroffers to Oracle

by on26 October 2007


New counteroffer of $8.2 billion proposed

it rejected Oracle Corporation’s purchase offer of $6.7 million, or $17/share, BEA Systems, Inc. issued a counteroffer to Oracle on Thursday, the 25th, indicating that it would be willing to be purchased for $8.2 billion, or $21/share.

Oracle promptly issued a rejection of the counteroffer and Oracle’s President, Charles Phillips, issued a letter to BEA’s Board of Directors that Oracle was standing by its earlier $6.7 billion bid until its expiration time of 5 P.M. P.D.T. on Sunday, October 28th  , adding, "…at which time Oracle will move on and evaluate other potential acquisitions." The $21/share price is the first time BEA has identified a price point for negotiations with Oracle.

BEA has been under pressure to find a buyer from Carl Icahn, a billionaire investor who has increased his percentage of ownership interest to 13 percent in BEA.  Icahn has insisted to BEA’s Board that the company is worth $21/share.  Oracle has indicated that BEA’s price is too high, considering that the $8.2 billion price is almost 11 times the amount of BEA’s revenue from its software maintenance services during the past 12 months.

Some analysts were optimistic that a deal was possible as BEA's software, known as middleware because it helps connect business computer systems, would be very desirable to add to Oracle's database programs and would help Oracle compete more equitably with SAP. Other analysts are speculating that another company interested in purchasing BEA may be working behind the scenes to woo BEA’s favor and also to drive the per share price up to the point where Oracle will walk away from the BEA counteroffer.

Beyond Oracle, other companies that have been rumored as potential BEA buyers include IBM, Hewlett-Packard and SAP.

Follow the BEA saga by reading more here.

Last modified on 26 October 2007
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