Oracle Gets BEA, Both Get What They Want

Playing hard to get paid off for BEA Systems as Oracle agreed Wednesday to pay approximately $7.85 billion in cash for the company. The total price of the transaction will be approximately $8.5 billion, said Larry Ellison, CEO of Oracle.

Oracle will pay $19.375 per share of BEA stock, which closed at $15.58 on Tuesday. BEA declined a $17 per-share offer in October.

Oracle expects an increase of 1 cent to 2 cents per share to adjusted earnings in the first year after the deal closes. However, Oracle shares fell on Wednesday to $21.27, while BEA stock gained $2.96, or 19 percent to $18.54.

Oracle has invested more than $25 billion in acquisitions over the past three years.

In a letter to Charles Phillips, president of Oracle, the companies said they had a common vision for the service oriented architecture and together will provide a series of complementary middleware solutions, including identity management, business intelligence and performance management, enterprise content management, and vertical-specific technologies like a communications service delivery platform.

In addition to benefiting both companies and shareholders, Larry Ellison, CEO of Oracle, said, “This is a great day for the Java community and its vision of open, standards-based computing not dominated by any one company’s technology.”

Ellison also could not resist a shot at Microsoft. “With this deal we believe our open, standards-based technology stack will offer greater value to our customers than any alternative in the market place including those offered by Microsoft, IBM, SAP, Sun and the open source vendors,” he said. “We believe this … creates the leading platform for customers to deploy, manage and analyze enterprise applications with substantial and compelling technical advantages over Microsoft.Net and other Java alternatives.”

Laurent Lachal, senior analyst at Ovum, said at the time of the first proposal that despite the contentious natures of Oracle’s acquisitions, it tends to retain customers of its acquired properties once the acquisition is complete. He also said that if Oracle had moved in 2004 to buy the company, it could have had it at a much lower price.

“If Oracle can maintain the combined telecom middleware market shares of the two companies it would control 50 percent of the telecom middleware market after the acquisition. This is more than twice the market share of second placed IBM,” said Peter Mottishaw, partner and senior analyst at OSS Observer.

Mottishaw said that the purchase price, at five times BEA’s expected 2007 revenue, is in line with other recent acquisitions in the telecom software segment.

The deal is expected to close around November.

BEA Systems www.bea.com
Oracle www.oracle.com

Share this article: Email, Slashdot, Digg, Del.icio.us, Yahoo!MyWeb, Windows Live Favorites, Furl
Add this article feed to: RSS, My Yahoo, Newsgator, Bloglines