Oracle Wants BEA Systems - Without the 'Long, Drawn-Out Process'

More than a week after Oracle's (ORCL) unsolicited offer for BEA Systems (BEAS) and there is still no sign of another offer from a third party or an increased offer by ORCL. It is really not surprising at all that another entity has failed to surface, as entering a bidding war with ORCL is essentially an act of futility.

Granted, another competitor such as IBM (IBM), Sun (JAVA), or perhaps Microsoft (MSFT) may want to force ORCL to spend more cash for BEAS, but that sort of activity can be more disruptive than productive, and would have very little impact on ORCL in the long run. Besides, it is abundantly clear that ORCL will need to raise it offer without a third-party influence if it intends to reach a friendly agreement with BEAS.

What is largely being ignored to this point is the very real chance of regulatory delays if a BEAS/ORCL agreement is reached. The universal assessment of this potential combination is that ORCL will be both eliminating a direct competitor in several middleware markets and firmly establishing itself as the dominant entity in those same markets. This again raises the question of whether ORCL has reached the point where it no longer considers the DOJ/FTC as an obstacle due to its PSFT success a few years ago. This has to be a significant factor in ORCL's final decision to move on BEAS, as there are very clearly competition issues present here.

ORCL released the text of a letter to the BEAS Board of Directors, Tuesday morning.

Oracle has no interest in a long, drawn-out process to acquire BEA. If the BEA board refuses to execute an acquisition agreement and refuses to let their shareholders vote, then our $17 per share proposal to acquire BEA will expire at 5 p.m., PDT, on Sunday, October 28, 2007.

Naturally, this language is essentially meaningless, as ORCL is fully aware that its offer will again be rejected. Deadline or no deadline, ORCL is almost certain to raise its offer closer the $20/share level in order to avoid the "long, drawn-out process" it claims to want to avoid.