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By | John Oates 16th January 2008 13:34

BEA finally says yes to Oracle - for $8.5bn

Larry flashes extra cash

Oracle has signed a definitive agreement to buy BEA for $8.5bn.

Larry Ellison's Oracle will pay $19.375 for each BEA share - BEA shares were trading at $15.58 before the offer was made.

The two have been courting for some time although Oracle walked away from a possible deal in October after saying it could not better its offer of $17 a share. BEA had demanded as much as $21 a share.

Ellison said: "BEA products will significantly enhance and extend Oracle's Fusion middleware software suite...customers can choose among Oracle and BEA's middleware products, knowing that those products will gracefully interoperate and be supported for years to come.".

At $19.375 per share, Oracle is paying $8.5bn for the middleware firm - or $7.2bn once BEA's cash pile of $1.3bn is removed from the equation.

BEA's board of directors has unanimously accepted the offer, subject to shareholder and the usual regulatory approval. It is expected to close within six months. Oracle expects the takeover to add 1-2 cents per share to its earnings on a non-GAAP basis in the first full year after closing.

The two firms conducted an embarrassing woo fest last October. Oracle made a surprise offer for BEA at $17 per share. BEA initially rejected the bid out of hand, but within days thought better, and started batting its eyelids and cooing that it would happily entertain suitors at $21 per share.

Oracle refused to bite though, and, seemingly, followed through on its threat to simply walk away from the deal. It added, spitefully: "Nobody would seriously consider paying that kind of multiple for a software company with shrinking new license sales."

Oracle’s stomping into the sunset prompted BEA’s biggest stockholder, activist shareholder Carl Ichan, to let rip at the firm’s management. Icahn added ominously: "You should have no doubt that I intend to hold each of you personally responsible to act on behalf of BEA's shareholders in full compliance with the high standards that your fiduciary duties require, especially in light of your past record."

Three months on, and with the economy definitely on the turn, all parties appear to have found they can all get on afterall.

The press release is here.®

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