Oracle is Triumphant in Pursuit of BEA Systems

Jan 17, 05:00 AM

SAN FRANCISCO -- Oracle bought another company Wednesday -- this time, business-software firm BEA Systems, ending a months-long pursuit.

The $8.5 billion deal represents the latest trophy on Oracle CEO Larry Ellison's growing mantel of acquisitions.

Oracle has spent more than $25 billion the past three years buying a long list of competitors -- notably, PeopleSoft, Siebel Systems and Hyperion Solutions -- in a bold bid to slice rival SAP's lead in the multibillion-dollar market for software that lets companies automate everything from accounting to human resources to inventory management.

Oracle agreed to pay $19.38 per share for BEA, a premium of 24% over BEA's closing share price of $15.58 on Tuesday.

The offer for San Jose, Calif.-based BEA is higher than Oracle's previous bid, which was spurned in October.

That overture, for $17 a share, valued BEA at about $6.7 billion. BEA's board demanded $21 per share.

"It underscores the fact that Oracle would not take no for an answer," says Albert Pang, an analyst at IDC.

BEA's largest shareholder, billionaire investor Carl Icahn, who in September demanded that BEA's board put the company up for sale, approved the deal.

"This transaction is an excellent example of the great results that can be achieved for all constituencies when the shareholder activist is able to work cooperatively with management," Icahn said in a statement.

Wall Street was pleased. Oracle shares improved 3%, to $21.92, in trading Wednesday. BEA stock soared 18%, to $18.46.

Oracle says it expects BEA to add 1 cent to 2 cents per share to adjusted earnings in the first year after the deal closes. BEA's directors unanimously approved Wednesday's offer, which is expected to close in midyear.

As a result of its software shopping spree, Oracle has made inroads in the banking, retail, utilities and telecommunications markets, Pang says.

And Oracle isn't done. It is most likely sniffing software developers in the communications, utilities and financial services markets, Pang says.

Oracle's acquisitions have lifted its bottom line: It has logged eight-consecutive quarters in which earnings have soared at least 20%. Last month, Oracle reported a second-quarter profit of $1.3 billion, or 25 cents a share, up 35% from the same quarter a year ago.

Oracle's buying binge also is symptomatic of an insatiable appetite for mergers and acquisitions in the business-software industry. On Wednesday, Sun Microsystems snapped up database-software maker MySQL for $1 billion.

There were 227 deals totaling $59.4 billion in 2007, compared with 194 deals worth $18.6 billion in 2006, according to IDC. (c) Copyright 2005 USA TODAY, a division of Gannett Co. Inc. Oracle is Triumphant in Pursuit of BEA Systems
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