Oracle's Higher Price Lands BEA
That appears to have been the M&A strategy behind Oracle Corp. (Nasdaq: ORCL)'s pursuit of IT giant BEA Systems Inc. (Nasdaq: BEAS). Oracle failed in October with a $17 per-share bid, which was dismissed by its takeover target as too low. Today, though, Oracle has returned with a $19.375 bid that has been accepted. (See Oracle to Buy BEA, Oracle Lets BEA Go, and Oracle's Gauntlet.)
That bid values BEA at about $8.5 billion, though the net value of the acquisition will be about $7.2 billion once BEA's cash pile of $1.3 billion is accounted for.
The news gave Oracle's share price a lift of 37 cents, about 1.7 percent, to $21.67, while BEA's stock jumped by $2.97, about 19 percent, to $18.56.
Oracle's move is the latest in a string of acquisitions that makes the database giant's Oracle Communications business an increasingly important vendor and partner for the world's carriers.
During the past two years it has acquired its way into the heart of the telecom software sector and has started producing platforms that integrate its OSS, CRM (customer relationship management), and ERP (enterprise resource planning) software. (See Oracle Leads OSS News Charge, Oracle Buys Another OSS Firm, Oracle Buys More OSS With MetaSolv, Oracle Acquires Portal, Oracle Acquires [email protected], and Oracle Buying Into Service Delivery .)
BEA is a major supplier of middleware to carriers and has emerged as one of the key vendors in the service delivery platform (SDP) sector , which is having an increasingly strong influence on OSS developments. (See SingTel Uses BEA for SDP, Vodafone NL Picks BEA, BEA Leads NXTcomm's SDP Charge, BEA Touts Middleware Lead, 2007 Top Ten: Big OSS Stories, Telcos Waffle on Web 2.0, Vendors Take On Service Management, and Why OSS Silos Must Come Down.)
In its most recent full fiscal year, which ended January 31, 2007, BEA reported revenues of $1.4 billion and net income of just $4.5 million, or 1 cent per share.
Oracle expects the acquisition to add between 1 and 2 cents per share to its non-GAAP earnings during the first full year after the acquisition closes, which is expected sometime in the middle of 2008.
— Ray Le Maistre, International News Editor, Light Reading