Oracle’s bid for BEA expires

Oracle’s bid for BEA expires

Oracle warns BEA Systems board not to presume a renewal of its $17 per share offer

Oracle’s bid to acquire middleware developer BEA Systems has expired with the passing of the 28 October deadline.

Earlier this month, Oracle had offered to acquire BEA for $17 a share, valuing the company at $6.7bn. This offer was repeatedly rejected by the BEA board, who refused to meet with Oracle and did not put the proposal to its shareholders.

In a letter to Oracle on 26 October, BEA said, “Our board cannot endorse a proposal that it has concluded significantly undervalues BEA.” BEA put forward a counter-proposal of $21 a share, which was rejected by Oracle.

Oracle said that it will not put in a new offer, but did urge BEA's shareholders to pressure the board.

"We asked the BEA Board to allow their shareholders to vote on our $17 per share proposal. They chose not to. If the BEA shareholders are unhappy with the behaviour of the BEA Board it is up to those shareholders, not Oracle, to take the appropriate action," Oracle said in a statement.

Oracle warned that BEA shareholders should not assume that the database giant will renew its $17 share offer in the future. “Over time many things can change: BEA's business might materially weaken, the stock market can fall further from its recent record highs, or Oracle may have committed its capital elsewhere,” Oracle said.

BEA pioneered the application server market, but years ago lost the market share lead to IBM and is under attack from low cost open source alternatives such as Jboss, a Red Hat subsidiary. More recently the company has been pushing into the market for service oriented architectures (SOAs), but has yet to establish itself as a leader there.

The company has been the subject of acquisition rumours for some time now. The situation is believe to create uncertainty with prospective buyers about whether they can stake their future on the software.

BEA's revenues also demonstrate a decline in new software sales, indicating that the vendor is failing to attract new customers.

Analysts don't consider an acquisition a matter of 'if', but rather one of 'when'.