SAP Watch

Oct 12 2007   2:08PM GMT

BEA to Oracle: Do better or get lost

JackDanahy Jack Danahy Profile: JackDanahy

The recent news of Oracle’s bid to acquire troubled enterprise infrastructure software company BEA took an interesting turn today. Despite Oracle offering $17 per share, some 25% over market price before the deal was announced, BEA has now responded to the Redwood Shores giant saying that’s nowhere near fair valuation. From BEA’s official response:

“…It is apparent to our Board […] that BEA is worth substantially more to Oracle, to others and, importantly, to our shareholders than the price indicated in your letter […] We believe that the absence of current financial information in the public markets limits investor visibility into our performance. We expect that this will be corrected in the near future.”

Furthermore, BEA is not about to get lured into any kind of shenanigans that might endanger its competitiveness.

“…As we have made clear to you in previous discussions, we are very sensitive to the fact that Oracle is a direct competitor of BEA. Therefore, the Board cannot consider any process which is long in duration, open-ended in nature, or would divulge competitively sensitive information which could materially harm our business and our shareholders’ interests.”

An interesting turn of events, indeed. It seems the BEA folks are quite confident, and the market is responding; as of this writing, BEA’s stock price is approaching $19 a share, a neat one-day bump of about 40%. Still, Goldman Sachs analysts Sarah Friar and Derek Bingham believe Oracle will be game for a price tag of $20 or more per share.

It’s an all-cash deal, so the question is: Will Oracle dig that deep into the coffers just to get BEA in the bag? And if they do, how will this impact SAP and other competitors? Better yet, will SAP, IBM, HP and other key players engage in a bidding war now that there’s blood in the water? Stay tuned as news editor Jon Franke digs deeper into this over the weekend for an in-depth analysis early next week.

Matt Danielsson

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