Oracle To Buy BEA Systems In $8.5 Billion Deal

Source: DOW JONES NEWSWIRES




Oracle Corp. (ORCL) will buy BEA Systems Inc. (BEAS) for $8.5 billion three months after BEA slapped away an Oracle takeover offer as too low.

Oracle would pay $19.38 for each BEA share, a 24% premium to Tuesday's close price of $15.58.

Shares of Oracle fell in premarket trading to $21.10 after closing Tuesday at $21.31. BEA shares had yet to trade in premarket activity.

Oracle made an unsolicited $6.7 billion, or $17 a share, takeover proposal in October, but the company let it expire weeks later after BEA said the bid was unacceptable. At the same time, BEA added it was looking to start negotiations with interested parties willing to pay at least $21 a share.

"The addition of BEA products and technology will significantly enhance and extend Oracle's Fusion middleware software suite," said Oracle Chief Executive Larry Ellison. "Middleware" is a general term for any programming that serves to mediate between two separate and often already existing programs.

BEA Chairman and CEO Alfred Chuang called the deal the culmination of a " diligent and thoughtful process" to maximize stockholder value. The company's largest shareholder, billionaire Carl Icahn, had called for an auction to sell the business-management-software firm.

BEA is one of the few independent, medium-sized software companies left in Silicon Valley as the technology industry consolidates. Oracle has for years eyed BEA as an acquisition target.

BEA has been battling Oracle, International Business Machines Corp. (IBM) and others in the market for middleware. BEA, with a product called WebLogic, pioneered one category of middleware called application servers that are used to build Web services.

Oracle expects the buyout to boost earnings by 1 cent to 2 cents a share, excluding items, in the first year after the deal closes. That is scheduled to happen by midyear.