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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— Om Malik on Bloomberg TV, talking about Yahoo, the September issue of Vogue Magazine, and our overdependence on Google