BEA Systems rebuffs Oracle's $17-per-share offer

By Angela McDaniels

Seattle, Oct. 12 - BEA Systems, Inc. rejected an offer from Oracle Corp. to acquire the company for $17.00 per share in cash.

The offer, made on Tuesday, is a 25% premium over BEA's closing price of $13.62 (Nasdaq: BEAS) on Thursday.

"We have made a serious proposal including a substantial premium for BEA," Oracle president Charles Phillips said in a news release. "We believe our all cash offer provides the best value for BEA's shareholders and the best home for BEA's employees and customers."

In response, BEA Systems said the proposal significantly undervalues the company.

"We believe that the absence of current financial information in the public markets limits investor visibility into our performance. We expect that this will be corrected in the near future when we become current on our SEC filings, and can communicate more fully with the investment community," BEA System's William Klein said in a letter to Phillips.

BEA Systems also noted that Oracle is a direct competitor and, as a result, BEA Sytems could not consider any process that is long in duration, is open-ended in nature or would divulge competitively sensitive information.

In a letter to BEA Systems, investor Carl C. Icahn agreed that the bid is too low and suggested that the company use momentum from the Oracle proposal to sell the company via an auction process or by accepting a preemptive bid. Icahn is BEA Systems' largest shareholder.

Late Friday, Oracle released its own letter to BEA Sytems, reiterating that it is available to "proceed immediately with a process that would lead to a friendly transaction."

In the letter, Phillips said Oracle and BEA System management agreed to meet Friday morning in order to execute a definite agreement before the open on Monday, "an accelerated process that would be, by anyone's standard, 'short in duration' and not 'open-ended.'"

Meanwhile, the company remains committed to its proposed price of $17.00 per share.

"Our proposed price is a substantial premium to an already-inflated stock price that reflected speculation of the potential sale of BEA and represents a more than 40% premium to BEA's stock price before the appearance of activist shareholders in mid-August of this year," Phillips said in the letter.

BEA Systems is based in San Jose, Calif., and makes enterprise application and service infrastructure software.

Oracle is a Redwood City, Calif.-based enterprise software company.

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