Oracle-BEA deal gets the green light

The Oracle-BEA Systems Inc. merger was effectively approved by the federal government yesterday when the U.S. Department of Justice and Federal Trade Commission opted to terminate their antitrust review of the proposed deal early.

It's now up to the BEA stockholders, who on Friday morning will vote on Oracle's $17 per share offer for the middleware giant -- an offer that was initially rejected but ultimately accepted by BEA's board of directors under pressure from Carl Icahn, a major technology investor and BEA's biggest stockholder.

SearchOracle.com recently spoke with Dennis Callaghan, an analyst with the New York City-based 451 Group, to find out what a finalized merger would mean for BEA and Oracle customers, and how the merger would affect Oracle's product portfolio. Here's what Callaghan had to say:

What will Oracle Fusion Middleware look like if BEA is brought into the Oracle fold?

Dennis Callaghan: Oracle would be wise to put [BEA WebLogic] at the center of Fusion Middleware, rather than their own application server. In terms of how the market has voted, there's really no comparison [between the two]. I would expect BEA's [Business Process Management] stuff to supersede anything Oracle's got. The portal product that emerges will most likely closely resemble that which BEA acquired when it bought Plumtree. I don't consider either Oracle or BEA to be that strong in the [enterprise service bus (ESB)] realm, but probably would give the edge to the BEA AquaLogic ESB here. It's a slightly more established product that seems to be getting traction in the market. And if [Oracle leads] with WebLogic as their app server, it stands to reason that AquaLogic ESB would win out. All this being said, it should be fairly easy for Oracle to fill in and enhance these technologies with things it has elsewhere in its portfolio, such as the [Business Process Execution Language] engine it got when it bought Collaxa in 2004, which has always been a pretty strong product.

Should BEA users be worried?

Callaghan: Oracle, despite its 'evil empire' image, has by most accounts done a pretty good job of developing and supporting PeopleSoft, J.D. Edwards and Siebel applications and [the company is] not forcing customers into a new and different application suite. I would expect they would do the same thing with BEA, given how prevalent WebLogic is vs. Oracle's own application server. The company also has tremendous [research and development] resources to put into these products. Oracle generated about $5.5 billion in cash last year, compared to about $100 million for BEA. The fact that this ended up being a friendly takeover should bode well for the BEA product set as well.

What does increased consolidation in IT marketplace mean for potential middleware buyers?

Callaghan: Consolidation always creates opportunities to look at new vendors. [IBM's WebSphere] passed WebLogic long ago as number one in application servers, it has a comprehensive middleware/SOA infrastructure around it and no one is going to acquire IBM. Red Hat-JBoss is becoming a much more mature and capable middleware offering/SOA backbone [and] by the very nature of open source is very responsive to customer needs, [although] I'm still concerned about the speed of their product development cycles. So, it never hurts to consider alternatives when there is any uncertainty about future product development plans.

Author: Mark Brunelli and Jon Franke @ SearchOracle.com

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