Oracle engaged in battle again

No one expected Oracle’s proposed $6.7 billion acquisition of BEA last week to go any smoother than other Oracle acquisitions, but no one expects a company to turn down a 25% premium, either. With BEA rejecting Oracle’s offer, the coming battle will either demonstrate the importance of middleware or the inability to learn lessons from the great software buy-ups from 2001.

Last week, Oracle tendered an offer to buy BEA through a letter delivered to BEA’s Board of Directors in which it offered $17 per share in cash--a 25% premium over the previous day’s closing price of $13.62.

Oracle President Charles Phillips said the acquisition will enable Oracle to increase its engineering resources and accelerate the development of its suite of middleware products, while Laurent Lachal, senior analyst at Ovum, said Oracle's claim that it will protect the investment of BEA customers may be one of the least contentious issues in such a deal.
And perhaps he is right.

This week, the contention is over money. BEA believes it is worth substantially more and cancelled a meeting the companies had scheduled to formulate details of a definitive agreement. BEA has not planned to reschedule.

Oracle responded by issuing a statement saying it remains available to discuss and complete a transaction quickly and efficiently.

The statement by Phillips said BEA's management agreed to meet to commence a process intended to result in the execution of definitive agreements before the open of business on Monday, Oct. 15, but that BEA cancelled the meeting and declined invitations to reschedule.

“In my subsequent discussions with Bill earlier today, I asked whether there was any process that BEA would prefer to follow to move towards a friendly transaction and was told that BEA had no such process in mind,” Phillips said. “We are available to proceed immediately with a process that would lead to a friendly transaction. In the meantime, we remain committed to our proposed price of $17.00 per share, provided that the BEA Board and management team do not institute any measures which reduce the value of the company or shift value from BEA's shareholders to the management team.”

Those spoiling for a bidding war may have to wait, as SAP's chief executive officer, Henning Kagermann, reportedly said yesterday that it would not be making a bid for BEA at this time.