John Paczkowski

Recent Posts by John Paczkowski

Your Mother Was a DOS Programmer and Your Father Smelled of Printer Ink. Now Go or I'll Reject Your Offer a Third Time!

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You have to take a broader view and realize this is an industry like any other–telecom, railroads. They went through consolidation. Why shouldn’t the computer industry be any different? This shouldn’t have been a surprise to anybody. But it seemed to be, and a lot of people thought I was nuts when I said these things. And that’s why we’re out there alone as a consolidator.”

Oracle CEO Larry Ellison, Forbes magazine, July 2006

Will BEA Systems go down in history as the place where the Ellisonian consolidation wave sweeping the business-software market finally broke and rolled back? Not likely, but at the moment it’s doing a passable job of holding it back. This week the company rejected Oracle’s $17-per-share, unsolicited takeover offer for the second time, refusing even to meet with the company to discuss it.

And so Oracle is turning up the heat a bit. In a letter to BEA’s board, Oracle President Charles Phillips said it will walk away from its proposal if BEA doesn’t accept it or put it before shareholders for a vote.

Dear Members of the Board of Directors:

“Last night we were told by Bill Klein, Vice President-Business Planning and Development (speaking on behalf of the board), that BEA’s board again rejected our proposed price of $17 per share in cash. The board has refused to meet with us since we made our Oct. 9 proposal.
Oracle urges the BEA board of directors to let BEA’s shareholders decide: sign an acquisition agreement with Oracle and allow the shareholders to vote. Oracle believes that our $17 per share price is generous and there are no offers for BEA above $17 per share. $17 per share represents:

  • a 21% premium to BEA’s closing price of $14.05 on the date before we
    made our proposal;

  • a 31.5% premium to $12.93, the 52-week average before our proposal;
  • a 44% premium to $11.77, BEA’s stock price on the date immediately
    prior to the date that activist shareholders disclosed their position
    in BEA; and

  • a price higher than BEA’s five-year high before our proposal.

“Oracle has no interest in a long, drawn-out process to acquire BEA. If the BEA board refuses to execute an acquisition agreement and refuses to let their shareholders vote, then our $17-per-share proposal to acquire BEA will expire at 5 p.m. PDT, on Sunday, Oct. 28.

Sincerely,

ORACLE CORPORATION

Interesting move, eh? More so given its impact on BEA’s share price today. Prior to Oracle’s offer, BEA was trading at $14.05 per share. After it, the stock hit $18.58. This morning, it’s trading at $17.98–down 3.28% on fears that Oracle will rescind its offer.


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I think the NSA has a job to do and we need the NSA. But as (physicist) Robert Oppenheimer said, “When you see something that is technically sweet, you go ahead and do it and argue about what to do about it only after you’ve had your technical success. That is the way it was with the atomic bomb.”

— Phil Zimmerman, PGP inventor and Silent Circle co-founder, in an interview with Om Malik