BEA rejects Oracle offer

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A few days ago database and applications giant Oracle announced it was offering $6.7 billion to acquire middleware vendor BEA Systems.

Now however, the executive team at BEA have rejected that bid, claiming that, at $17 per share, the offer "seriously undervalues" the company, despite representing a 25% premium over BEA's closing price last Thursday.

The story, however, is far from over - the highly acquisitive Oracle management team is extremely unlikely to accept the rejection and move on.

For a start, BEA's AquaLogic products, which are designed to enable organisations to build a service-oriented architecture (SOA) that links disparate applications together, would be a highly welcome addition to Oracle's own Fusion line of middleware.

But whether BEA executives share that view is questionable. They have long argued that middleware should be purchased independently of the applications they integrate - a position that simply doesn't fit with Oracle's strategy of selling both technologies together.

As a general rule, the executive team at Oracle doesn't tend to take no for an answer - as its protracted, 18-month hostile takeover of PeopleSoft between 2003 and 2005 so amply demonstrated.

Your Comments and Questions

Jon Mell, 3 months ago

Now the deal has gone through what is Logicalis's view on this? What does it mean for customers who have adopted Oracle Fusion and should IBM WebSphere be worried?

Sandra Stephens, 5 months ago

I note that BEA's first earnings report since summer 2006 (due to accounting problems) shows better than expected earnings. However, Larry Ellison (Oracle CEO) stated that regardless Oracle would only pay less for BEA than its original offer. It may be that BEA has shot itself in the foot by rejecting the original offer, with no other suitors in the pipeline and a likely lower bid from Oracle due in the near future.

Jon Mell, 6 months ago

This is an interesting move - as I understand it Oracle has had a few attempts at releasing a competitive J2EE platform against IBM and BEA with Fusion being its latest attempt. Are they going to through this out and adopt WebLogic?

George Black, 6 months ago

I agree and I think the deal will go through at some point in the near future, for two reasons: first, the BEA board has said that although the price is not right it is not fundamentally against the idea of a takeover by Oracle; Second, growth of new software licences has been relatively flat at BEA for a few years now, and there are question marks about how it can compete in a constantly consolidating software industry (note the pending acquisition of Business Objects by SAP). I thinks this is a question of 'when' not 'if'.