Bidding Starts For BEA Systems. Oracle Bids $6.7B And Gets Rejected
October 13th, 2007
People on the stock market have been expecting this for more than a year to see the acquisition of BEA Systems (NASDAQ:BEA), which Cramer founder of TheStreet.com already pinpointed on Monday. He said it loud and clear “Buy BEA Systems before it gets a bid” and it looks like today was the day.
Oracle (NASDAQ:ORCL) had made an (uninvited) offer to buy BEA Systems that went up to $6.7B, cash, which translates in about $17 a share and was 25% higher than what the company was selling on the stock market, $14. They also mentioned that this is not going to be a hostile bid though it happened before with companies like PeoplSoft, for example. Carl Icahn, the activist shareholder with 13.2% of the company declared that he will try to push management to a sale, so I guess he could use the money.
However, Oracle is not the only company interested in taking over BEA Systems. The Germans at SAP (NYSE: SAP) may also be interested and rumors say their offer - seems like some private offers have been made - could go up to $21 a share because they need to fill some gaps in their products line.
The expected happened and BEA Systems denied the $6.7B offer from Oracle, by saying that the 25% premium could be set higher because the company is “worth substantially more”. It looks like they’re trying to get the most out of the bidders and decided to start a bidding war. With all these BEA Systems’ price on the stock market rose by 38.18% up to $18.82 so that puts Oracle behind.
The stock market is a very smart system. It dictates the right price set by those that bring along with their cash, the trust in a company. BEA acted wisely by rejecting the first offer, even if analysts consider it would do good in Oracle’s yard, because I think they can increase to more than $21 if they play ball the right way. BEA Systems is involved in transaction processing, billing, customer service, provisioning an securities trading so it’s obvious why people are so interested.
Let the bidding war begin!
