Buyout Rumors Swirl Around
BEA Systems"> But Oracle has played the coy suitor before. Do not count it out, yet. Plus, HP has some other issues with which to contend."HP cant pay more than $6 billion (based on 420 million outstanding shares at a price of $14.50 to $15, or about three times sales) for BEA without seriously exposing itself financially," Bob Stimson, a Boston-based financial analyst who follows both Oracle and BEA for WR Hambrecht + Co., told eWEEK. "On the other hand, Oracle could pay from up to $17 or $18 per share, but that would assume that Oracle could get a lot of cost synergies at a 20 to 25 percent expense reduction." Like Oracle, HP has been in acquisition mode for the past year. The company, which is based in Palo Alto, Calif., announced last month that it is buying Opsware for $1.6 billion, and it added Mercury Interactive for $4.5 billion in July 2006. Perhaps it has had its fill of swallowing others for a while. Oracle last spring bought business intelligence supplier Hyperion for $3.3 billion. "I think that the two companies [HP and BEA] have talked," Stimson said. "And about six weeks ago, they decided to leave it at a strategic partnership level. Thats when people were expecting the take-out [acquisition news], but it didnt happen that way. They decided to keep dating rather than get married." Credit Suisse analyst Jason Maynard is another expert who believes that the BEA, based in San Jose, Calif., may be acquired in the next three to five months for a buyout price of $15 to $18 per share. "The recent market speculation about an HP takeover is more wishful thinking than reality," Maynard wrote in a recent report. "Using our leveraged-buyout analysis, we believe a financial buyer could pay somewhere around $15 to $16 (per share), while a strategic buyer has the potential to pay $1 to $3 (per share) more. "While management may still be hesitant about selling the business, its our opinion that they are rapidly losing the ability to influence that decision." He thinks the company will likely be acquired by a private equity firm or byyou guessed itOracle Corp. Meanwhile, Oracle sits quietly, waiting for things to fall its way. Time, it seems, is on its side. Well keep our eyes on this developing situation here at eWEEK for you. Check out eWEEK.coms for the latest news, views and analysis on servers, switches and networking protocols for the enterprise and small businesses.
To read about HPs purchase of Opsware, click here.