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Oracle Corp. late Thursday said the $21 a share price tag that BEA Systems Inc. has slapped on itself is an "impossibly high price" to pay for the middleware company. BEA had said Thursday that after consulting with its financial adviser, Goldman, Sachs & Co., it was willing to begin negotiations with Oracle or any other potential buyer for $21 per share, or about $8.3 billion. BEA rejected an Oct. 12 unsolicited bid from Redwood Shores, Calif.-based Oracle for $17 per share, or about $6.7 billion. But Oracle scoffed at the $21 price saying it is a multiple of nearly 11 times BEA's last twelve months reported maintenance revenue. "Nobody would seriously consider paying that kind of multiple for a software company with shrinking new license sales," Oracle president Charles Phillips wrote in a letter to BEA's board of directors late Thursday. Instead, Phillips reiterated Oracle's offer to purchase the middleware vendor at $17 per share. He also urged that BEA's board to put the offer to a shareholder vote. BEA, of San Jose, Calif., faces pressure from activist investor Carl Icahn, who has a 13.2% stake and wants the company to sell itself. Icahn, like the BEA board, has said he'd like to see "a better price." Investors, analysts and arbitrageurs have been contemplating a bidding war for BEA, but so far no other suitors have stepped up. There has been some speculation that Palo Alto, Calif.-based Hewlett-Packard Development Co. LP may be interested or that Germany's SAP AG may step forward. But neither company has made an overture. SAP recently struck a deal to buy France's Business Objects SA, which also competes with BEA. Phillips noted in his letter that Oracle is still the only party that has stepped up with a bid for BEA. "Apparently no other companies think that BEA is worth $17 per share, let alone $21 per share." Some analysts believe BEA will succumb to Oracle in the $18 to $19 price range. Others doubt Oracle will move up its offer. Oracle's bid is set to expire on Sunday Oct. 28. If BEA maintains its stance, Oracle will "move on and evaluate other potential acquisitions," Phillips' letter said. Oracle has been tenacious in its acquisition strategy spending more than $21 billion for 33 software companies over the last few years. If it is successful, the deal with BEA 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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