BEA Shareholders Overwhelmingly Approve Oracle Merger

Questions remain about how the acquisition will impact Oracle technology and the middleware market.

BEA Systems is one step closer to being acquired by Oracle. The company announced April 4 that its shareholders voted nearly unanimously in favor of Oracle's plan to acquire the platform provider for approximately $8.5 billion.

BEA said in a statement that 99.9 percent of its shareholders voted to adopt the Agreement and Plan of Merger, which constitutes nearly 69 percent of BEA's outstanding shares. Once the deal closes, pending standard regulatory clearance from the European Commission, BEA is expected to become a wholly-owned subsidiary of Oracle.

Oracle, known for its acquisitive appetite over the past several years, hit a few bumps in the road in its quest to acquire BEA-a company Oracle CEO Larry Ellison often publicly derided before he decided to buy it. In October 2007, through a series of letters to BEA's Board of Directors, Oracle bid $17 per share for the company, or about $6.6 billion. BEA declined Oracle's offer on more than one occasion, stating that Oracle's bid undervalued the company.

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After a threatened proxy battle, expectations of a potential white knight bidder and more skirmishes with Oracle, BEA finally succumbed to Oracle's offer-at a 14 percent premium over the initial bid.

In January Oracle announced that it would pay $8.5 billion for BEA.

Where Does BEA Fit in Oracle's Middleware?

The questions now-or at least once the transaction is complete-remain the same as when the deal was first announced: What impact will BEA's middleware technology have on Oracle's Fusion Middleware stack? What impact will BEA have on Oracle's emerging next generation applications stack, Fusion Applications, given its reliance on Fusion Middleware? And ultimately, what impact will Oracle's acquisition of BEA-the last remaining independent middleware provider-have on the platform market where IBM, Microsoft, Hewlett-Packard and SAP are fighting for dominance?

In a scripted call with analysts and press announcing the agreed upon merger, Ellison attempted to shed some light on the company's plans with BEA. He said that the acquisition of BEA represents "a very big step in our vision of becoming the strategic vendor of choice for our customers at every level of the stack, across industry verticals. With this deal we believe our open standards-based technology stack will offer greater value than any other vendor-than Microsoft, IBM, SAP, Sun and open-source vendors."

Ellison said that although the two companies have numerous middleware products, BEA's product line and vertical market penetration are "overwhelmingly complementary" to Oracle's Fusion Middleware platform. "To cite just two examples, as soon as this deal closes we immediately become a leader in messaging and transaction processing platforms and a leader in the telco vertical," said Ellison.

Barring an additional review period from the European Commission, BEA officials said in a statement the deal is expected to receive clearance by the end of April.