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Oracle's $6.7 Billion Bid for BEA Turned Down

Posted by ScuttleMonkey on Fri Oct 12, 2007 07:46 PM
from the not-rich-enough dept.
Businesses IT
andy1307 writes to tell us that according to the Mercury News, Oracle has made an unsolicited bid to buy BEA Systems for about $6.7 billion. BEA confirmed that it rejected the $17 a share bid as too low. "BEA told Phillips that its board of directors believes BEA 'is worth substantially more to Oracle, to others and, importantly, to our shareholders than the price indicated in your letter.' Oracle's aggressive bid may be an attempt to pre-empt an acquisition by others, Finley said. Those named in the past as potential suitors include IBM, the German software company SAP AG and Hewlett-Packard. Trip Chowdhry of Global Equity Research said he expects a counterbid from SAP, which he said needs BEA to survive. 'If they don't get BEA, probably in two years SAP will be on the block to sell itself,' Chowdhry predicted. Oracle needs to keep BEA out of competitors' hands, he said. Chowdhry said the offer currently 'is not right. Probably at $21 the deal will get done.'"
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Firehose:Oracle makes 6.6 billion $ bid for BEA by andy1307 (656570)
[+] News: Oracle Buys BEA 115 comments
In an event not as surprising as this morning's buyout announcement, but still noteworthy, Oracle has purchased BEA Systems. The middleware maker was snapped up for the sum of $8.5 billion, the second offer Oracle put forward. "BEA had long been considered a prime takeover target in an industry that has been consolidating for several years, but BEA executives had repeatedly dismissed Oracle's overtures, saying the company could perform better independently. Mr. Icahn began buying up BEA shares last summer, and today owns 13 percent of the company. The deal makes Oracle the undisputed leader in the market for middleware, business software that gets its name from its role as a layer of programming code that resides between a company's database system and the payroll, human resources and inventory systems that use the same data."
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Oracle's $6.7 Billion Bid for BEA Turned Down 25 Comments More /

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  • Bea Arthur = Win (Score:3, Funny)

    by User 956 (568564) on Friday October 12 2007, @07:54PM (#20961829) Homepage
    BEA told Phillips that its board of directors believes BEA 'is worth substantially more to Oracle, to others and, importantly, to our shareholders than the price indicated in your letter.'

    I agree. I mean, Bea was a total powerhouse in Golden Girls.

  • Misparsed... (Score:5, Funny)

    by meringuoid (568297) on Friday October 12 2007, @08:08PM (#20961951)
    ... I thought for a moment that said 'BAE Systems'.

    Oracle buy one of the world's major munitions manufacturers... well, do you want to argue about which is the best database with people who manufacture JSFs and Typhoons? No? Me neither...

  • They should have taken it (Score:5, Interesting)

    by Thaelon (250687) on Friday October 12 2007, @08:23PM (#20962021)
    I work with BEA products, namely Weblogic and JRockit. Neither impress me. Weblogic is constantly failing to hand out connections (which is it's primary job) and the stack traces JRockit produces are formatted differently from those of Sun's JVM (which prevents my IDE from turning them into clickable hotlinks that take me to the lines of offending code). FSM knows why they made them different. Oh and the line numbers in your stack trace will be wrong unless you turn off optimization - which is the the whole point of using JRockit. (It's supposed to be faster than Sun's JVM - I've never seen proof).
    • Classic! One more "insightful" I think, no?

    • Re: (Score:3, Informative)

      by Walles (99143)
      Full disclosure: I work for BEA.

      the stack traces JRockit produces are formatted differently from those of Sun's JVM (which prevents my IDE from turning them into clickable hotlinks that take me to the lines of offending code). FSM knows why they made them different.

      Since about two years back our stack traces look identical to SUN's. I'm at home right now and can't give you a specific release for that change. The difference was that old versions of JRockit used to show full method signatures rather tha

  • Why? (Score:4, Interesting)

    by ebonum (830686) on Friday October 12 2007, @08:24PM (#20962027)
    Perhaps I'm missing something. Can someone explain the great value in BEA? Why does SAP need this to survive? Does this guy own a million shares in BEAS or does he know something I don't. My knowledge in this space is a little weak. I do know that my company ( I shouldn't say who, but our market cap is a lot higher than BEAS ) very happily dumped Weblogic for jBoss. The transition went remarkably smoothly ( Disclaimer: We did have a jBoss god on staff ), and it saves us A LOT of money. We use it for hosting some very large, complicated, financial applications. Based on what I have seen, BEA sells a product that has become a commodity. It should no longer command a premium.

    • Re:Why? (Score:4, Insightful)

      by the eric conspiracy (20178) on Friday October 12 2007, @08:41PM (#20962117)
      If you are selling enterprise products for a million dollars a pop that are based on J2EE technologies there are a lot of companies out there that don't want to hear that they are getting something based on FOSS.

      This is the space Oracle plays in. By buying BEA they get a bunch more of this kind of customer.

      To them you can bet it is worth 6.7 billion.

    • Personally, I'd take "SAP needs BEA to survive" with a grain of salt. SAP just bought Business Objects, which is widely used, and I don't see them going away anytime soon.
  • The deal will happen. If BEA wanted to stay independent they would have just said they were not selling. The fact that they said the offer was too low is negotiation.

    What happens to Oracle's OAS team and product if this happens? OAS has been soundly whipped by BEA in the marketplace and they are basically both the same thing.

  • No-brainer (Score:4, Interesting)

    by dustisearth (1170113) on Friday October 12 2007, @08:30PM (#20962055)
    When the stock jumps well beyond the proposed acquisition price (to $18.82), that's a solid indication that the offer isn't going to cut it. One would normally expect a jump in price upon the announcement of a buyout offer at a premium, but typically the price will jump to some intermediate value between the previous market price and the offer price, in effect discounting for the chance that the deal will fall apart. Here the market response went well beyond that. Now the question is, will we see a bidding war? And with whom?

  • Trip Chowdhry of Global Equity Research said he expects a counterbid from SAP, which he said needs BEA to survive. 'If they don't get BEA, probably in two years SAP will be on the block to sell itself,
    So if Oracle buys BEA, does that set the scene for Oracle/BEA to buy SAP in two year's time?

    Does this mean companies need to become an international monopoly in order to survive? My mind boggles at all the corporate takeovers, M&As etc.

    • So if Oracle buys BEA, does that set the scene for Oracle/BEA to buy SAP in two year's time? Does this mean companies need to become an international monopoly in order to survive?

      Because something that was a mere buzzword for a long time finally shows some effect on the market: SOA.
      There are basically three big companies that started marketing SOA and laying the foundation with some standards: Microsoft, IBM and BEA. And they had good reasons for that. Currently "enterprise software" is graced with vendor-lockins that make Microsoft look like innocent angels.
      To do anything with SAP you need a SAP consultant that will milk you until you are dry like dust. Same for ECM systems. SOA

  • It was reported as a done deal (Score:3, Insightful)

    by DreadfulGrape (398188) on Friday October 12 2007, @09:37PM (#20962443)
    Wow, did the business press ever jump the gun on this one. The headline in the Wall St. Journal this morning was "Oracle Buys BEA".

    • I noticed this too, but it did seem as if the deal would be solid.

      I really don't know much about BEA outside of its Wikipedia entry, but I'm sure that since their solutions are database oriented (correct me if I'm wrong, please), having (what I would suppose would be) full access to Oracle's codebase is extremely advantageous.

      With the way Oracle has been performing lately on the stock market, I'm sure BEA will regret not having taken this offer. If anything, their rejection may actually harm them in the

  • Fortune 500 companies are finally wising up to JBoss as an alternative to WebLogic. BEA better not wait too long waiting for a suitor lest it find itself an old maid.
  • If it happens or not, either way a prospect looking to buy BEA has to wonder if Weblogic (as it exists today) is still going to be around in a few years. The other big players will probably profit from the move.
  • This is the first time BEA has seen $18/share since 2002 - they should look at any offer in this range as a gift from the gods. I remember talking to BEA sales reps back in 1999-2000, and man they were arrogant pricks! They were absolutely positive that you needed them waaaay worse than they needed you. Based on their latest moves, I'm not sure they've learned anything since then...

    When Larry snagged PeopleSoft, they hurt BEA very badly - there are lots of PeopleSoft instances out there running under Web

    • Re: (Score:3, Interesting)

      by PCM2 (4486)

      This is the first time BEA has seen $18/share since 2002 - they should look at any offer in this range as a gift from the gods. I remember talking to BEA sales reps back in 1999-2000, and man they were arrogant pricks! They were absolutely positive that you needed them waaaay worse than they needed you. Based on their latest moves, I'm not sure they've learned anything since then...

      I once talked to some BEA execs at the BEA offices as a member of the trade press, maybe around 2001. The BEA folks in the ro

    • PeopleSoft runs on Tuxedo, not WebLogic. You might be able to run integration services under WLS, but the core is a Tux app.

      As for packaged deals, yeah, it makes competition hard, but we've whupped Oracle in competitive shoot outs on the product merits more often then not.

  • I'm not sure why Oracle wants BEA Systems, which appears to be antiquated and riddled with issues at this point. As other posters have indicated, switching to JBoss is not only successful it saves a ton of money. It was near a year ago Oracle bid for JBoss, losing out to Red Hat, then created their own "Unbreakable Linux" distribution based on Red Hat Linux. If they're willing to plunk down $6.8 billion for BEA Systems, Red Hat, at a market cap of $4.15 billion is not only a relative bargain but seems to

  • A BEA employee's perspective (Score:5, Interesting)

    by Stu Charlton (1311) on Saturday October 13 2007, @01:59AM (#20963777) Homepage
    I don't have insider information. I am not a spokesperson at this time. This is just my opinion.

    Basically, BEA wants to stay indepdenent, because it lets us do interesting things if we keep shareholders happy. And, by and large, we had been doing just that for the past 3 years, until licenses started to fall earlier this year. Wall Street forces a quarter by quarter mentality that's very hard to meet in a midsized company, in my opinion, given that the nature of "infrastructure software" involves longer sales cycles than when the dot-com bubble kept the "J2EE app server" purchase orders flowing in.

    For those that suggest BEA's WebLogic is somehow commoditized and is the source of all of our woes, please understand a few things:

    - BEA sells a *lot* more than an app server. Both Tuxedo and WebLogic Server have not been a sales focus for years at BEA, at least in North America -- Tux is still growing in Asia. The core products are still a cash cow, so we invest most of our R&D into it, but it doesn't account for the growth we've had since 2002. Most of that has been from Portal, Integration, and the new AquaLogic stuff.

    - BEA contributes a lot to Java open source -- it's on the Eclipse board, it runs two Apache projects, is a major contributer and partner with Interface21 (the Spring guys), etc.

    - Open source has never been BEA's biggest competitor. IBM and Oracle are. Really. The reason is that a major portion of BEA's sales focus is on enterprise license deals in the $million$ range. In the smaller deals, that's more likely where you see .NET rearing its head a lot. Sure, there is some JBoss (and a lot more Tomcat!). But, JBoss generates around $22 million annually [news.com]. BEA makes that in under a week. And lest you say "But, this doesn't measure the free deployments!", we (and Oracle) don't care about those -- most companies aren't going to adopt an open source software solution for a production use without at least a support contract! Support , subscription, consulting, etc. is how RedHat is viable, it's also how BEA makes most of its revenue.

    - BEA's *new* license growth had fallen recently, but maintenance and overall revenue continues to rise. That means that, the *rate* in which our middleware is being acquired is slowing for us as of late, not that people have somehow stopped buying our stuff. So, yep, we could be doing a better job improving & selling what we have with AquaLogic and WebLogic, but it's not doom and gloom times here. Maybe it will be better under another company, I donno. Part of the problem is that pure "middleware" in general is a hard sell, as companies like TIBCO are also feeling right now -- SOA was the latest trend, with some reasonable enthusiasm and growth associated with it, but the real fortune was made in the peak of the dot-com boom, and it's hard to replicate that sort of hype. Oracle sells middleware along side applications, databases, security suites, etc., so it's not quite as hard to sell the business on the benefits.

    - I have no idea what the article is talking about with regards to SAP. I think NetWeaver is a crap pile, but that doesn't mean they're dead if they don't buy us. They could go open source, or improve it.... People stick with SAP because they're locked in, not because NetWeaver is supposed to be better.

    - Even if this deal doesn't go through, BEA is viable enough to stay independent. It has over $1B in the bank, it generates high free cash flow, and if we could get this stock options review over & done with, we could actually have some good information for the Street to price us properly. The question really is about the stock price -- whether the shareholders think we can raise it on our own, or someone else can do a better job of it.

    Anyway, I've been pretty happy with the company for the past 3 years. Regardless of what happens, it's exciting times.

    • I've been in the Java "Enterprise" domain for nearly ten years now. I first used BEA's weblogics back in 1999 (not even sure if it was owned by BEA yet). It was a good product, respected standards, and seemed to be development friendly. I considered it the best servlet engine at the time.

      A couple of years ago I did a contract gig for a fortune 500 company that wanted to create corporate internal and external web portals. The company purchased the entire BEA middleware stack from Weblogics to Portal to

    • For customers, middleware is not that important anymore. We have all the middleware we could need. We are served, thanks.
      Typically, customers look for business solutions. They look for standardized packages for their business domain. This is were SAP is getting stronger. (BTW, we had to tell SAP that we did not need middleware from their side...)
      The whole SOA trend goes in this direction. To stop thinking about integration as technical plumbing but as connections with a business meaning. This is an arena
  • I thought British European Airways was merged with Brisish Overseas Aorwasy to form Brisihs Air many years ago

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