BEA to Oracle: We're not opposed to a reasonable offer

IDG News Service - BEA Systems Inc. has told Oracle Corp. that the two companies can still make a deal -- just not the one on the table.

Oracle released a statement today saying that BEA's board of directors had officially turned down its offer to buy the company. It set a deadline of Sunday at 5 p.m. Pacific time for BEA to accept the $17-per-share bid.

But several hours later, BEA fired back its own missive in the form of a letter from William Klein, vice president of planning and development, to Oracle President Charles Phillips. In the letter, Klein characterized Oracle's offer as too low but made it clear BEA is not against being acquired for the right price.

"BEA is worth significantly more than $17 to Oracle, to others, and most importantly to BEA shareholders," the letter said. "BEA's Board has not indicated that it would be opposed to a transaction that appropriately reflects BEA's value, reached through a reasonable process."

An Oracle spokesperson did not immediately return a request for comment.

The total value of Oracle's existing bid is about $6.7 billion, and the enterprise software giant said it "has no interest in a long, drawn-out process to acquire BEA."

So far, the BEA-Oracle talks have sparked dueling public statements, missed meetings and shareholder angst, but they haven't been nearly as heated as other merger battles, such as the one surrounding Oracle's acquisition of PeopleSoft.

Still, it remains unclear whether Oracle will increase its offer for BEA, which it termed "generous" in its statement.

"Oracle typically has some [pricing] ratios it uses in its acquisition strategy," Forrester Research Inc. analyst Ray Wang said. "If they really want to dominate the middleware space, this is an acquisition they'd want to make."

If it succeeds in buying BEA, Oracle would swallow up a major competitor in the application server market, a scenario that has had some observers wondering about the fate of BEA's technologies.

Oracle's move to purchase BEA is only the latest in a string of high-profile purchases in 2007. The company has forked over billions for a wide array of enterprise software companies, including business process management vendor Hyperion Solutions and data grid application vendor Tangosol.

BEA has some products that would fill holes in Oracle's portfolio. But the two companies compete closely on other fronts, such as the markets for Web server and enterprise service bus offerings.

"Those are areas with lots of overlap," Wang said. "But there's a lot of good technologies on both sides."