Oracle says no to BEA's $8.2 bln pricetag

BEA Systems Inc (BEAS.O) said on Thursday it is willing to sell itself for $8.2 billion, but the price was rejected as "impossibly high" by Oracle Corp (ORCL.O), the only company that has publicly expressed interest in the software maker.

BEA, which is under pressure from billionaire investor Carl Icahn to find a buyer, said it was worth $21 per share, which is a 24 percent premium to the $17-per-share bid that Oracle offered on October 12.

Oracle said BEA's price represented an 80 percent premium to its shares before activist shareholders started pushing for a sale of the company, and nearly 11 times BEA's revenue from software maintenance services in the last 12 months.

"Nobody would seriously consider paying that kind of multiple for a software company with shrinking new license sales," Oracle President Charles Phillips said in a letter to BEA's board.

He said Oracle was standing by its $6.7 billion bid which expires at 5 p.m. California time on Sunday, adding "at which time Oracle will move on and evaluate other potential acquisitions."

When asked to respond to the letter from Phillips, a BEA spokesperson referred to a statement issued earlier in the day in which the BEA's board said "We continue to believe that Oracle's unsolicited proposal to acquire BEA at $17 per share significantly undervalues BEA, and is therefore not in the best interests of BEA shareholders."

Shares of BEA had closed at $17.53 on the Nasdaq, down 2 cents as investors appeared to also believe that the $21 price set by the business software maker may be too optimistic.

Some analysts still thought a deal was possible as BEA's software, called middleware because it helps connect business computer systems, could be added to Oracle's database programs to help it better compete with SAP AG (SAPG.DE)

"Nobody is more interested in this than Oracle," said Bart Narter, an analyst with financial research and consulting firm Celent. "I think there is a lot of posturing. Maybe they'll get a little higher price. Maybe."

The $21 price had marked the first time BEA gave a price point for negotiations with Oracle, the world's third largest software company with a market value of about $100 billion.

"Over the last several weeks, Oracle has repeatedly asked us for the price at which we would be willing to begin negotiations," BEA's board said earlier on Thursday. BEA is "prepared to authorize negotiations with third parties including Oracle at a price of $21.00 per share," it said.

Talk of a buyout for BEA began in August when Icahn said he had begun acquiring shares in the business software maker and called on its board to put the company up for sale. Chief Executive Alfred Chuang had rebuffed the billionaire activist investor, who boosted his stake to about 13 percent, making him the company's biggest shareholder.

Besides Oracle, other companies that have been touted as possible buyers of BEA include International Business Machines (IBM.N), Hewlett-Packard (HPQ.N) and SAP.

An SAP spokesman said the company was not interested in buying BEA, while representatives for Hewlett-Packard and IBM declined comment. Icahn could not be reached for comment.

Jefferies & Co. analyst Katherine Egbert said earlier on Thursday another suitor may be talking to BEA behind the scenes. "For the BEA board to make the claim that they are worth $21 (per share) without any detailed supporting analysis could mean that they have another interested party," she said.

BEA said that after consulting with its investment bank, Goldman Sachs, it believes Oracle or another company would still see earnings benefit if it paid $21 per share or higher.

But Phillips said in his letter, "We believe that your counterproposal at $21 per share price is an impossibly high price for Oracle or any other potential acquirer."

Author: Jim Finkle @ washingtonpost.com

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Oracle buys operational planning firm

In a move designed to beef-up its enterprise performance management offerings, Oracle yesterday agreed to buy privately held operational planning software maker Interlace Systems for an undisclosed sum.

San Mateo, California-based Interlace develops a suite of software called Integrated Business Planning that integrates data from planning and operational systems to uncover gaps between financial and operational plans. The software works by allowing business planners to change operational assumptions and assess the business impact on operations. It uses a "change-based data modeling server" that pulls together data from disparate operational plans into an integrated model to allow multiple users to run what-if scenarios by changing operational assumptions and then see the outcome of the changes on business plans.

Interlace's product is used for a variety of operational planning processes such as sales and operational planning or demand plan creation and is applicable for both mid-market and large enterprises, Oracle said. The software has also gained a strong following in the high-tech and industrial manufacturing sectors, with disk drive maker Seagate Technologies and electrical systems firm Eaton among its customers.

Oracle said that technology combined with its own Enterprise Performance Management (EPM) system will provide an integrated framework for financial and strategic operational planning.

"The combination of Interlace Systems and Oracle will help enable business planners to rapidly evaluate the impact of changes to business assumptions across all plans...and [also allow them to] benefit from flexibility, speed and accuracy not found in traditional spreadsheet-based and function-specific planning tools," said Thomas Kurian, senior vice president of server technologies at Redwood Shores, California-based Oracle.

The deal is expected to close in November and represents Oracle's second acquisition in the performance management space this year. In April it gobbled up Hyperion Solutions for $3.3bn which laid the foundation for its EPM product strategy.

Oracle is likely to absorb Interlace's technology into that core EPM system, which sits as a hot-pluggable component of Oracle's Fusion middleware stack, to provide a common perspective across financial and strategic planning.

"In today's global economy, organizations need a streamlined planning process that links strategic operational plans to the financial plan of record," Kurian said.

Oracle said it will provide details on specific product roadmap of integration timelines after the merger closes next month.

Oracle did however say it will continue to offer Interlace's products as standalone applications and also pledged to continue to work with databases and application servers from other vendors, including Microsoft's SQL Server, IBM's WebSphere, and SAP's NetWeaver.

Interlace is venture backed by Accel and NEA. Oracle said that it would only retain Interlace staff with "significant domain expertise" in its products, meaning that some layoffs are imminent.

Oracle's shopping spree shows no sign of abating. The company continues to snap up smaller companies like Interlace while at the same time fishing for larger ones. Interlace is Oracle's 10th acquisition this year, and its 36th since 2005. It also comes just a day after Oracle re-iterated its $17 per share offer for middleware vendor BEA Systems. Earlier this month BEA had rejected an initial $6.7bn from Oracle as too low and has until Sunday to accept it.

Author: Maden Sheina @ www.cbronline.com

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Oracle issues BEA deal ultimatum

Oracle on Tuesday threatened to walk away from its proposed acquisition of BEA Systems by Sunday unless the embattled software company agreed to a deal.

While the threat wiped nearly 4 per cent from BEA’s share price by mid-afternoon, the stock still stood above the $17-a-share Oracle offer, pointing to a belief on Wall Street that the brinkmanship had not seriously damped the prospect of a deal and that Oracle or another buyer would still end up paying a higher price.

“Oracle has no interest in a long, drawn-out process to acquire BEA,” Chuck Phillips, Oracle’s president, wrote in a letter addressed to the company’s board on Tuesday. The letter followed what Oracle said had been another rejection by the BEA board of its all-cash offer.

BEA rejected the latest approach, repeating its earlier claim that the offer “seriously undervalues” the company and adding that it was open to “a transaction that appropriately reflects BEA’s value, reached through a reasonable process.”

The attempt to bring a quick end to the BEA battle is in stark contrast to the fight over PeopleSoft, the deal that launched Oracle’s ambitious attempt to force consolidation in parts of the business software market. That fight lasted 18 months, in part because Oracle had to persuade a court to overturn a US antitrust objection to the deal.

Though he started by offering $16 a share for PeopleSoft and insisting at one point that that was his “final” price, Larry Ellison, Oracle’s chief executive officer, eventually paid $26.50 a share to win over the PeopleSoft board.

Justifying the offer for BEA, Mr Phillips said it represented a 21 per cent premium to the price the day before the proposal was announced and a 44 per cent premium to the level before activist investor Carl Icahn disclosed in August that he had bought a stake in the company.

Mr Icahn, BEA’s biggest shareholder and a critic of the company’s management, has been pressuring BEA to find another buyer.

Author: Richards Waters @ www.ft.com

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