Oracle Corp. (Nasdaq: ORCL) was rebuffed in their unsolicited bid to acquire middleware software maker BEA Systems Inc. (Nasdaq: BEAS). Oracle offered $17.00 per share in cash with the entire transaction valued at approximately $6.7 Billion, but BEA rejected the offer and stated in their response letter to oracle "BEA is worth substantially more to Oracle, to others and, importantly, to our shareholders than the price indicated in your letter".
While investor Carl Icahn is using his 13.2 percent stake in BEA to push for a sale, he supported the decision to spurn Oracle's offer. It is highly likely that other companies will approach BEA with a better offer, but Oracle is not expected to back down. BEA may be hoping for a white knight.
BEA shares soared above Oracle's bid today rising $5.20, or 38 percent, to finish Friday at $18.82 after reaching a new 52-week high of $18.94 earlier in the day. Oracle has been working hard to increase their portfolio of software products, having spent $25 billion on 30 acquisitions in the past three years.
I'm not sure how I feel about this on a personal level; having been on the receiving end of an acquisition twice, when Aetna US Healthcare bought Prudential HealthCare and about six years ago when Pfizer gobbled up Warner Lambert in a hostile takeover. Do you think this will be a good thing for BEA and how much do you think a buyer is willing to pay?
I'm interested in seeing how this unfolds. My company - a fortune 500 financial outfit - just concluded a large purchase of the whole BEA platform. We specifically didn't pick Oracle because their product wasn't up to the job. Hence the bid, I suppose. While their product is very good, the implementation was a first-class nightmare. We deliberately allocated a lot of money for consulting right from BEA so we could avoid the mistakes of the past, when we would just do it ourselves. We burned through the money pretty fast and ended up with half-done work and a real reticence to interact with them again.
Mind you, we were (are) a big Microsoft shop, and we had gotten tired of being treated like a second-rate customer after so many years with MS. For the record, BEA treated us just as poorly the moment the ink on the contract was dry.
If Oracle buys them, I hope their customer support is better.
Posted by: Anonymous | October 19, 2007 11:11 AM | Permalink to Comment