Larry's Just Not That Into You: the No-Excuses Truth to Understanding Oracle's Bid for BEA
BEA Systems made good on its promise to allow the deadline to lapse on Oracle’s $17-per-share offer to buy the company. And Oracle made good on its threat to drop the bid. Minutes after 5 p.m. PDT yesterday, the deadline set by Oracle for BEA to agree to its offer, the company issued a terse, disdainful statement announcing its expiration.
On Oct. 9, Oracle proposed to acquire BEA for $17 per share. That offer expired today, Oct. 28, at 5 p.m. BEA shareholders should not assume that Oracle will renew its $17-per-share offer in the future.
“Over time many things can change: BEA’s business might materially weaken, the stock market can fall further from its recent record highs, or Oracle may have committed its capital elsewhere. 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. We asked the BEA Board to allow their shareholders to vote on our $17-per-share proposal. They chose not to. 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.”
And by “BEA shareholders,” Oracle clearly meant one BEA shareholder in particular–Carl Icahn, who owns 13.2% of BEA’s outstanding shares, and has for some time now been pushing the company to put itself up for sale.
And Icahn did not disappoint. The billionaire investor filed suit against BEA, demanding it hold a shareholder meeting to consider the auction of the company. “BEA should allow its shareholders to decide the fate of BEA by conducting an auction sale process and allowing the shareholders to accept or reject the proposal made by the highest bidder,” Icahn wrote in a letter to BEA’s board. “BEA should not allow the stalking-horse bid from Oracle to disappear (failure to take the Oracle bid as a stalking horse would be a grave dereliction of your fiduciary duty in my view). If a topping bid arises, then all the better. But if no topping bid arises, it should be up to the BEA shareholders to decide whether to take the Oracle bid or remain as an independent company.”
BEA’s board, for its part, insists that it’s not opposed to selling the company, it’s just opposed to selling it to Oracle for $17 per share. But it may end up doing just that, given the company’s current financial situation and shareholder pressure that’s only just beginning to build. “BEA is in a tailspin,” Cowen & Co. analyst Peter Goldmacher told Bloomberg. “At $17, it would be a graceful exit for BEA, which has been in rough shape for a while. … BEA is badly miscalculating Oracle’s desire. Oracle doesn’t need BEA. At some point, Oracle will buy these guys, but it’s completely at Oracle’s discretion.”