Oracle Bids $6.6 Billion for BEA

Oct 14, 12:20 PM

Current Headlines: By Laurie J. Flynn

Oracle said Friday that it had made an unsolicited $6.66 billion bid for BEA Systems, but BEA said the offer was too low and was complicated by BEA's investigation into its granting of stock options.

"BEA is worth substantially more to Oracle, to others and, importantly, to our shareholders," William Klein, the company's vice president for business planning and development, said in a letter to Oracle's president, Charles Phillips Jr.

Oracle's offer of $17 a share, made in a letter Tuesday to BEA's board, was a 25 percent premium over BEA's closing price $13.62 on Thursday. Shares of BEA jumped Friday on the prospect that Oracle's offer could set off a bidding war for the company.

For Oracle, the acquisition of BEA would help it face a mounting competitive threat from SAP and Microsoft. Just last week, SAP said it would acquire Business Objects, a smaller rival in the corporate software market, for $6.8 billion.

"We believe our all-cash offer provides the best value for BEA's shareholders and the best home for BEA's employees and customers," Phillips said in his letter to BEA.

BEA, which produces software known as middleware that is used by large corporations, has long been considered a prime takeover target in an industry that has been consolidating for several years. Today BEA faces mounting pressure from Oracle and IBM, among others. But BEA executives have long dismissed Oracle's repeated overtures, saying the company could perform better independently.

Oracle's move for BEA comes just a few weeks after the investor Carl Icahn increased his ownership stake in BEA to 13.2 percent in an attempt to force BEA to seek a buyer for the troubled company. Icahn threatened to stage a proxy fight to win a seat on the BEA board.

BEA is among more than 150 public companies that have disclosed investigations into the possible backdating of stock options. The company disclosed its internal investigation in August 2006 and has since begun the process of restating past quarterly results.

In his letter to Oracle, Klein said the absence of current public information about BEA's financial performance complicated the prospects for a merger.

Oracle has already proved just how hard it is willing to fight to close a deal. Oracle made a $10 billion hostile takeover bid for PeopleSoft in 2003, and spent more than a year fighting an antitrust battle . It also spent more than $21 billion to buy 33 software companies.

Originally published by The New York Times Media Group.

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