Oct 12, 2007 3:14 PM,

Oracle offers BEA $6.7 billion

By Tim McElligott

Oracle revealed today that it made an offer to BEA Systems on Tuesday, proposing to buy the company for approximately $6.7 billion.

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The offer was made through a letter Oracle delivered to BEA’s Board of Directors offering $17 per share in cash. The offered price is a 25% premium over yesterday's closing price of $13.62.

Oracle President Charles Phillips called it a serious proposal that provides the best value for BEA's shareholders and the best home for BEA's employees and customers. “This proposal is the culmination of repeated conversations with BEA's management over the last several years. We look forward to completing a friendly transaction as soon as possible," he said in a statement.

Phillips also said the acquisition will enable Oracle to increase its engineering resources and accelerate the development of its suite of middleware products.

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 here. For a start, it's not in Oracle's interest to get customers to defect. But also, it can point to its record with PeopleSoft, where after a very contentious take-over that many customers opposed, Oracle has managed to hold onto and even in some cases enhance the user base for PeopleSoft products. Obviously, bringing the offer into the open does put a lot of pressure on BEA's board. We'll have to wait and see what their reaction will be.”

Lachal said BEA was bound to be acquired sooner or later and that Oracle waited to be in a position of strength before acquiring it. That could have cost them, Lachal said. “Had it acquired in 2004, as it was considering, it would have picked up BEA's stock at its lowest, down at nearly $6 a share. It is now more than twice that amount.”

Lachal also said, “BEA shareholders may now be open to an offer, especially if goaded by billionaire investor Carl Icahn, who recently increased his stake in BEA to 8.5% and asked for the company to be sold.”