BEA Sets $21/Share Takeout Price, Oracle Rejects

BEA Systems announced Thursday it will discuss potential buyout offers if suitors are willing to pay $21/share, setting the stage for a potential $8.2 billion buyout. The company has already rejected Oracle's unsolicited $17/share bid (full story), saying in a release Thursday the bid price "significantly undervalues BEA, and is therefore not in the best interests of BEA shareholders." In a letter to BEA's board of directors, Oracle rejecting BEA's proposed acquisition price, calling it, "an impossibly high price for Oracle or any other potential acquirer," and pointing out no other potential buyers have come forward. However, BEA may not only be on Oracle's radar: "For the BEA board to make the claim that they are worth $21 (per share) without any detailed supporting analysis could mean that they have another interested party," said Jefferies analyst Katherine Egbert. Possible buyers besides Oracle include IBM and Hewlett-Packard. BEA noted its valuation was based on "a deep and diverse customer base including 75% of the Fortune Global 500 companies, compelling international growth opportunities in China and elsewhere, and a leadership position in the ongoing SOA evolution, as well as an exceptionally strong balance sheet with over $1 billion in cash and no debt." Shares of BEA are down 5.3% to $16.60 in pre-market trading Friday.

Sources: Press release, Reuters
Commentary: Oracle Wants BEA Systems - Without the 'Long, Drawn-Out Process' • BEA Rebuffs Oracle Again But Should Tread Carefully
Stocks to watch: BEAS, ORCL, IBM, HPQ. ETFs: PSJ, IIH
Earnings call transcript: BEA Systems F2Q08 (Qtr End 7/31/07)

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Comments

[King Kang]

I don't think I really see BEA's logic here. Yes, they were undervalued but the first offer of $17 per share was more than fair. $21 a share? No way. However, we should remember that Oracle did raise their bid for PeopleSoft, so a deal could still be done. I guess it just depends on how bad Oracle wants BEA. Probably using some of their backchannels to negotiate another deal right now www.newsvisual.com/new...