BEA rebuffs merger offer by Oracle

Entrprise infrastructure software major, BEA Systems Inc yesterday rejected an unsolicited $6.7-billion takeover bid from Oracle Corp, saying the offer was too low. Analysts say Oracle''s acquisition of BEA would would enable to plug some technology gaps in its portfolio.

Oracle''s offer for BEA comes within a week of its German rival SAP acquiring Business Objects SA of France, its largest acquisition, in a €4.8-billion ($6.8 billion) deal, (See: SAP snaps up Business Objects), in response to Oracle''s acquisition of Hyperion Solutions that operates in the same space as Business Objects, in April 2007 for $3.3 billion.

Oracle has been aggressively buying up companies to beat SAP in building a dominant share in the enterprise resource planning, or ERP, space. Its recent acquisitions include PeopleSoft in 2005 and Siebel in 2006 before Hyperion in April this year. Since 2005 Oracle has spent more than $25 billion on acquisitions, which include I-Flex in India.

Other Industry leaders like IBM, Microsoft, SAP and Hewlett Packard have been among the most aggressive buyers as the industry consolidates.

Oracle''s offer for BEA represents what would have been its biggest acquisition since it bought Siebel Systems for about $6 billion in January 2006, a move welcomed by BEA''s largest shareholder Carl Icahan, a vocal critic of the management.

The offer sent BEA''s price to a five-year high of $18.82, above Oracle''s offer of $17 per share. BEA has not reported its operating profit margin since July 2006 and has since released limited financial data as it reviews past results for "errors in its accounting of stock options grants".

Icahn, who has been advocating a merger with a larger software maker to cut operating costs, said he expected higher offers to emerge from Oracle'' rivals naming International Business Machines Corp and Hewlett-Packard Co.

BEA is being advised by Goldman, Sachs & Co. and Wachtell, Lipton, Rosen & Katz.