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Oracle compromises, buys BEA Systems

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Following a wrangle over the company's worth last year, Oracle has agreed to buy BEA Systems for about $8,5-billion. BEA had previously rejected an offer of $17.00 per share, holding out for $21.00, but has now accepted $19,375 per share. 

"The addition of BEA products and technology will significantly enhance and extend Oracle’s Fusion middleware software suite,” says Oracle CEO Larry Ellison. “Oracle Fusion middleware has an open 'hot-pluggable' architecture that allows customers the option of coupling BEA’s WebLogic Java Server to virtually all the components of the Fusion software suite.
"That’s just one example of how customers can choose among Oracle and BEA middleware products, knowing that those products will gracefully interoperate and be supported for years to come.”
Alfred Chuang, BEA’s chairman and CEO, adds: “Over the past several months our board of directors, with the assistance of independent financial and legal advisors, has reviewed various ways to maximise stockholder value, including engaging in discussions with third parties about a possible sale of the company.
"This transaction is the culmination of that diligent and thoughtful process, and we believe it is in the best interests of our shareholders. I am confident our innovative products, talented employees and worldwide customer base will be key contributors to the success of the combined company over the long term. We look forward to working with Oracle toward a successful completion of the transaction.”
Charles Philips, president of Oracle, comments: “BEA is a pioneer in middleware, and this combination recognizes the innovation and customer success the company has achieved. Our joint customers have consistently suggested this deal for more than three years.
“This transaction will accelerate the adoption of Java-based middleware technologies and SOA; advance innovation in enterprise applications infrastructure software; extend our strategic relationships with customers and partners; and increase our penetration in key regions like China.”
After the $17.00 per share offer from Oracle expired last year, BEA posted sterling quarterly results, notable for a 59% jump in earnings.

According to Gartner, Oracle's main motive is not to acquire technology, but to gain market share.
If a deal is finalised, Oracle would emerge as a portal, process and middleware vendor with revenue second in size only to IBM, the market leader. These two vendors would be the main players in the Java-centric middleware market, well ahead of the remaining vendors.
Oracle and IBM would also have a significant lead over Microsoft, which focuses on .NET-centric middleware, although Microsoft and SAP will continue to be formidable competitors in the larger application infrastructure market.
The technology of BEA's portfolio and Oracle Fusion Middleware overlaps significantly, so an acquisition would mean a lot of rationalisation.
Some BEA products – such as Tuxedo and WebLogic Server – have customers generating substantial maintenance revenue, so it would be in Oracle’s interest to keep supporting them, even if they don't become strategic components of Oracle Fusion Middleware.
Others – such as JRockit, AquaLogic BPM, AquaLogic PEP and AquaLogic Enterprise Repository – complement Oracle Fusion Middleware, so they might be fully integrated in the Oracle stack. BEA's technology is generally of a high quality, so it is not certain that Oracle's own products would always be chosen as strategic.
In some cases, the needs of Oracle Fusion Applications would determine which component product became strategic.
In the end, the next version of Oracle Fusion Middleware suite will incorporate some products of both origins and some products of both Fucsion and BEA will become supported legacy.