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Oracle Acquires BEA Systems For $8.5 Billion
Posted by Pradeep Sadanapalli | January 17, 2008 | 312 views
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Oracle Corp on Wednesday won a threemonth-long campaign to buy BEA Systems by raising its bid for the business software maker by 14% to $8.5 billion.
Activist investor Carl Icahn, BEA’s largest shareholder with a nearly 13% stake, said he supported the deal, one of last year’s highest profile corporate takeover battles.
Icahn and BEA’s board initially rejected Oracle, saying it undervalued the company, but no other buyers emerged even as BEA’s investment bank, Goldman Sachs, solicited bids from other software makers.
The price that BEA finally agreed to, $19.375 per share in cash, represents a compromise between the $17 that Oracle offered in October and the $21 that BEA had demanded.
“It’s a fair price. It’s a good deal for Oracle. It’s a good deal for BEA,” said Trip Chowdhry, analyst at Global Equities Research.
BEA is a maker of ‘middleware’, which helps business computer systems interact with each other. Oracle could sell its technology alongside its own middleware, database products and business-management software.
Icahn started accumulating a stake in BEA in August, when the stock traded as low as $11.02. He called on the board to put BEA up for sale, saying a bigger technology company would be able to boost revenue and profit.
Icahn had claimed that BEA was not worth as much to shareholders as a standalone entity as it would be to shareholders of a potential acquirer.
Jefferies & Co analyst Katherine Egbert said Icahn’s argument particularly rings true amid signs the US may be heading into a recession.
“In a recession, it is harder for smaller companies to compete,” Egbert said. “Companies are more reluctant to buy from smaller companies in a recession because you have uncertainty.”
SOURCES:
Times Of India
Topics: Techonology, Business News |
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