Oracle and BEA swap public love letters
BEA invited Oracle to play kiss-chase yesterday, as the database vendor came over all tough and macho in its effort to acquire the middleware firm. — Oracle sent BEA's directors a letter yesterday bemoaning their rejection of its $17 per share offer …
Context & Ripple Effects
Twelve days ago BEA told Oracle its $17-a-share approach undervalued the middleware firm — the bid was rejected as too low before Oracle had even made it formal. Yesterday the two traded open letters: Oracle wrote to BEA's directors bemoaning that rejection, while BEA confirmed publicly that it invited Oracle to keep pursuing the company.
The choreography matters more than the correspondence. BEA's move signals the fight is over price, not whether a deal should happen — while Oracle arrives with leverage from a strong September quarter in which new software licensing revenue grew 35 percent to $1.1 billion, its best in a decade. Both sides are negotiating in public, with shareholders reading along.
First-order effects
- BEA's public invitation converts a rejected one-shot bid into an open negotiation, putting the burden on Oracle either to raise above $17 or be seen walking away from a willing target.
- Oracle's letter formally pins the impasse on BEA's board, positioning the database vendor as the reasonable party in front of both companies' investors.
Second-order effects
- BEA directors must now defend their valuation against a bidder with fresh quarterly momentum — Oracle's strongest new-license growth in ten years gives it the financial standing to wait out the standoff.
- Rival middleware and infrastructure vendors face heightened takeover speculation, as Oracle's willingness to pursue BEA publicly reprices every standalone enterprise-software firm.
Third-order effects
- If the pattern holds, enterprise software consolidates toward full-stack vendors that pair databases with application servers — raising operational switching costs for customers who buy middleware and data tiers from one supplier.
- Public letter-exchange standoffs become a standard opening move in large software M&A, with boards using shareholder audiences to extract higher prices rather than rejecting bidders outright.
The trend: Enterprise software is consolidating through hostile, negotiated-in-public takeovers as cash-rich database and application vendors absorb standalone middleware firms like BEA.