Beas

[BettorsChat]

Carl Icahn boosted his stake in the software company BEA Systems (BEAS) to 13.22%, according to documents filed Thursday with the SEC. This marks the fourth time in less than a month that Icahn has increased his position in BEAS. In fact, Icahn increased his stake to 11.05% in forms filed Wednesday.

Not surprisingly, Icahn is pushing for a sale of the company. He says it is increasingly difficult for a stand-alone technology company, such as BEA, to profit in the current competitive environment.

[BettorsChat]

Oracle makes $6.7B bid for BEA

Oracle, in letter to BEA Systems' board, offers cash at a 25% premium; bidding war seen a possible as BEA shares soar over offer price.
By Chris Isidore, CNNMoney.com senior writer
October 12 2007: 10:11 AM EDT


NEW YORK (CNNMoney.com) -- Software provider Oracle is making a cash bid for BEA Systems, offering a 25 percent premium over its closing price that could set off a bidding war for the company.

Oracle (Charts, Fortune 500) is offering $17 a share for BEA (Charts), a leading provider of application software for computer servers. That's worth about $6.7 billion, based on BEA's total shares outstanding.

Shares of Oracle were off less than 1 percent in early following its announcement, but shares of BEA shot up 32 percent to $18 in early trading, topping the cash offer price, on the news.

Trip Chowdhry, managing director of Global Equities Research, said he believes there will soon be a bidding war for BEA between Oracle and its German rival, SAP (Charts) that could take the price of BEA as high as $21.

He said talk in the industry is that SAP has already made private bids for BEA to fill in gaps in its own line of product. He said Oracle is interested in buying BEA both to block its purchase by its key rival, as well as to enhance its own competitive position with companies such as IBM (Charts, Fortune 500).

Oracle's offer was contained in a letter to BEA's board. Despite releasing details of the offer without a sales agreement, Oracle said it is not looking at this as a hostile bid.

"We believe our all cash offer provides the best value for BEA's shareholders and the best home for BEA's employees and customers," said a statement from Oracle President Charles Phillips. "This proposal is the culmination of repeated conversations with BEA's management over the last several years. We look forward to completing a friendly transaction as soon as possible."

Oracle has made successful hostile bids for companies in the past, including PeopleSoft, which finally agreed to be purchased in 2004 after more than a year-long battle. But it has also completed friendly acquisitions, including Siebel Systems, a deal that it made in 2006.

Officials at San Jose, Calif.-based BEA Systems were not immediately available for comment on the Oracle announcement.

It has faced pressure from activist shareholder Carl Icahn to sell itself. Filings by Icahn earlier this month list him as now holding 13.2 percent of BEA shares, while other entities associated with him have additional stakes.

Icahn said in a filing a month ago that he believes "that a strategic acquirer could utilize greater resources and market presence" than BEA can as an independent company, and that he would "seek to meet with [BEA] management...to discuss the potential for such a transaction."

BEA products support functions such as transaction processing, billing, customer service, provisioning and securities trading. Oracle's statement said that if it acquires BEA it would continue to support its customers and products for years to come.

BEA has seen solid growth. According to a survey of analysts by earnings tracker First Call, BEA is forecast to see earnings rise 21 percent in the current period, which ends in October, and 31 percent for the full fiscal year, which ends in January. It has topped quarterly earnings forecasts five times in the last eight periods, and met the forecasts the other three times.

But when it missed revenue forecasts for its fiscal third quarter a year ago, it saw its shares plunge 16 percent in one day, and it has yet to recover from that loss.

That has left its shares have underperformed the sector. They are down about 10 percent over the last year, while the Dow Jones U.S. software index is up about 10 percent in the same period.

[BigWeiner]

I should've jumped on this when you first posted it