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The board of directors of BEA Systems has declined Oracles offer to acquire the company at $17 per share, saying the bid “significantly undervalues” BEA, according to a report on MarketWatch.com.
Oracle announced its intent to acquire BEA earlier in the day on Oct. 12. BEAs board had sent a letter to Oracle Oct. 11 stating that it couldnt become embroiled in any negotiations with Oracle, given that the companies are in direct competition, according to the report.
Click here to read more about questions raised by Oracles bid for BEA Systems.
Investor Carl Icahn, who owns 13 percent of BEA, has in recent weeks outspokenly advocated that BEA sell itself, given its declining value in the stock market.
But even Icahn isnt keen on the Oracle deal, saying the offer undervalues BEA. He said in a television interview that he was surprised that Oracle went public with its offer.
Will BEA still sell to Oracle? Click here to read more.
Oracles $6.7 billion bid for BEA represents a 24.8 percent premium over BEAs closing price Oct. 11 of $13.62 per share. And while BEA considers this bid too low, some analysts view the deal as hurting Oracle.
Bernstein Research analyst Charles Di Bona said in a research note Oct. 12 that, based on his companys analysis, “We view this transaction as financially unattractive for Oracle, yielding an ROI [return on investment] below Oracles cost of capital and reasonable hurdle rates, despite the higher risks associated with a larger merger and what we expect to be only limited technology synergies.”
Di Bona noted that BEA has a “poison pill” provision in its bylaws; Oracle would most likely need the approval of BEAs board to complete the transaction.
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