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Although Oracle Corp. remains in hot pursuit of BEA Systems Inc., the database giant is unlikely to pay $21 per share for its prey, as the middleware provider proposed Thursday. BEA said it would negotiate with potential acquirers and suggested a price of $21 per share, a 23.5% premium to the $17 per share offer Oracle proposed Oct. 19. BEA had quickly rejected that offer as too low. BEA said the higher valuation was generated after consultation with its financial adviser, Goldman, Sachs & Co. In a press release, the company's board said "based on analyst estimates of synergies in prior acquisitions by Oracle" and other software makers, it believes a buyer could get add to earnings in a BEA acquisition at "levels well in excess of $21 per share." This price would value BEA at about $8.26 billion, based on its roughly 393.4 million outstanding shares. Oracle's offer values BEA at about $6.7 billion. David Hilal, an analyst with Friedman, Billings, Ramsey & Co., said the move showed weakness on BEA's part and expects Oracle and BEA to come to terms with Oracle paying between $18 and $19 per share. "I don't think Oracle made their best and final offer," Hilal said. "Their track record says they are likely to make a better offer and BEA knows that, so BEA came with a higher price with the hopes of meeting somewhere in the middle." Others were unsure whether Oracle would budge. Speaking at an event in Silicon Valley Wednesday evening, Silver Lake co-founder and co-CEO David Roux said the lack of another bidder for BEA makes it unlikely Oracle will move very far from $17 per share. "My guess is they aren't going to pay much more," said Roux, a former Oracle executive vice president. "They may bump to close, but they aren't going to bid against themselves." There also is a question of timing. In a letter Tuesday to BEA's board, Oracle president Charles Phillips urged the board to put Oracle's offer to a vote by shareholders and said his company "has no interest in a long, drawn-out process to acquire BEA." Oracle has given BEA until Sunday night to decide whether it will accept its original offer. BEA and Oracle could not be reached for comment. The hostile nature of the takeover is unlikely to affect Oracle's eventual success when it comes to absorbing BEA, said Hilal. In 2005 Oracle completed a pitched 18-month battle to acquire rival firm PeopleSoft Inc. and it completed a $643-million hostile takeover of retail industry software provider Retek Inc. after entering a bidding war with rival SAP AG. "Oracle has shown it can do hostile and still be successful with the integration," Hilal said. A deal would surely please financier Carl Icahn, who owns a 13.2% stake in BEA. He has pressured BEA to sell and his initial reaction to the Oracle bid was that he was happy about the offer but would like to see "a better price." The San Jose, Calif., company said it has an "exceptionally strong balance sheet" with over $1 billion in cash and no debt. If successful, the deal would make Oracle the No. 2 player in the middleware market behind IBM Corp. Oracle and BEA share second place.  Deal Video
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