Oracle, BEA Systems in $8.5B deal

Oracle, BEA Systems in $8.5B deal - Activist investor Carl Icahn, BEA's largest shareholder, had been advocating a merger.

See all CNNMoney.com RSS FEEDS (close) By Aaron Smith, CNNMoney.com staff writer
January 16 2008: 9:57 AM EST

NEW YORK (CNNMoney.com) -- Software giant Oracle Corp. reached a deal to buy rival BEA Systems Inc. for $8.5 billion Wednesday, just months after its initial offer was rebuffed.

Oracle agreed to pay $19.375 in cash for each share of BEA, representing a 24 percent premium to where BEA's shares closed Tuesday.

Oracle said the deal is worth $7.2 billion, since BEA has $1.3 billion in cash on hand. The deal is expected to close in mid-October.

"For Oracle, this deal is a very big step towards completing our [goal] of being a strategic software vendor of choice for our customers," Oracle CEO Larry Ellison said during a conference call with investors.

Ellison said BEA CEO Alfred Chuang was "a pioneer in middleware," a type of software used by big businesses. With BEA under its wing, Ellison said he intends for Oracle to become a leader in middleware.

Shares of both companies moved on news of the deal. BEA (BEAS) soared 19 percent in morning trading, while Oracle (ORCL, Fortune 500) ticked lower 1 percent.

Oracle originally approached BEA back in October, when it made a $6.7 billion bid for the firm.

That offer was rejected by the BEA board, which said it wanted an offer of at least $21 a share.

But activist investor Carl Icahn supported a buyout. Icahn, who owns 51.8 million shares, or about 12.8 percent of the company, is BEA's biggest shareholder.

Redwood City, Calif.-based Oracle has a market capitalization of about $110 billion and has acquired more than 30 companies over the last three years, including PeopleSoft for more than $10 billion.

Over that period, Oracle's stock has risen about 60 percent, while BEA's shares have soared more than 80 percent.

Source: http://money.cnn.com/2008/01/16/news/companies/oracle/?postversion=2008011608