Oracle drops BEA acquisition offer

By Tom Sanders

Oct 30 2007 6:39AM

Oracle has retracted its US$6.7bn offer to acquire middleware maker BEA, after BEA allowed a Sunday deadline to expire.

BEA has repeatedly declined the offer and instead said that it would sell the company to anybody willing to pay US$8.3bn.

Oracle's offer represented US$17 per share. BEA was asking for US$21 instead.

Oracle said that it will not put in a new offer, but did urge BEA's shareholders to pressure the board.

"We asked the BEA Board to allow their shareholders to vote on our US$17 per share proposal. They chose not to. If the BEA shareholders are unhappy with the behaviour of the BEA Board it is up to those shareholders, not Oracle, to take the appropriate action," Oracle said in a statement.

"The BEA shareholders should not assume that Oracle will renew its US$17 per share offer in the future. Over time many things can change: BEA's business might materially weaken, the stock market can fall further from its recent record highs, or Oracle may have committed its capital elsewhere."

BEA pioneered the application server market, but years ago lost the market share lead to IBM and is under attack from low cost open source alternatives such as Jboss, a Red Hat subsidiary. More recently the company has been pushing into the market for service oriented architectures (SOAs), but has yet to establish itself as a leader there.

The company has been the subject of acquisition rumours for some time now. The situation is believe to create uncertainty with prospective buyers about whether they can stake their future on the software.

BEA's revenues also demonstrate a decline in new software sales, indicating that the vendor is failing to attract new customers.

Analysts don't consider an acquisition a matter of 'if', but rather one of 'when'.