Oracle buyout of BEA Systems seen as likely

Oracle buyout of BEA Systems seen as likely Software giant Oracle said it may not renew a $6.7 billion offer to buy out San Jose-based business software firm BEA Systems, after negotiations between the two firms collapsed. Analysts however, said that a deal is still likely.
   Oracle's $17-per-share offer to purchase BEA expired Sunday.
   In a statement released Sunday, Oracle said it would not raise its bid offer and invited BEA shareholders to revolt against the BEA board.
   'If the BEA shareholders are unhappy with the behavior of the BEA board it is up to those shareholders, not Oracle, to take the appropriate action,' the Oracle release said. 'Over the last 20 days the BEA board has repeatedly rejected our offer and refused to meet with us, even though we offered to meet without any preconditions.'
   On Friday, billionaire financier Carl C. Icahn, who owns slightly more than 13 percent of BEA stock, sent a letter to the BEA board criticizing the firm and threatening a proxy battle for control if BEA did not begin an auction process to sell itself. He called for the BEA board to allow shareholders to vote on the Oracle offer.
   In a response to the Icahn letter, BEA officials called the Oracle offer 'unacceptable,' saying it 'significantly undervalues' BEA, and countered with a $21-per-share proposal from any third party, including Oracle. 'We are opposed to selling the company at $17 per share,' said the BEA statement, 'We are not opposed to selling the company.'
   The $21-per-share proposal was rejected by Oracle as 'impossibly high.'
   BEA stock had been trading in a narrow $14-per-share range through October until the Oracle offer was made. Shares of BEA stock shot up to nearly $19 per share on Oct. 12 — the day of the Oracle buyout announcement — before settling back to a $16- to $17-per-share range late last week. According to the Wall Street Journal, as of today BEA has a market capitalization of $6.4 billion.
   Analysts said that despite the acrimonious tone of the two firms, another bidder is not likely to appear and that a deal between the two is still likely.
   Lehman Brothers analyst Israel Hernandez, writing in a Monday client note, pointed to BEA's weak fundamentals and poor execution.
   'In our view, the eventual acquisition of BEA by Oracle is not an 'if,' but a 'when' and at 'what price,' ' Hernandez wrote.