Oracle Tries To Buy BEA Systems for $6.7 Billion

Continuing its recent pattern of buying up other software companies, Oracle is making an unsolicited bid to purchase BEA Systems for $6.7 billion. In a letter to BEA's board, Oracle's management proposes to acquire its fellow software maker for $17 per share in an all cash deal.

BEA sells application server software and middleware that software developers use to build systems on which other applications run. If Oracle successfully acquires BEA, it would mark the company's biggest deal since it bought Siebel for about $6 billion in 2006. Earlier this year, Oracle purchased Hyperion Solutions, a business software developer, for more than $3 billion.

Oracle is already the world's third largest software developer, partly as a result of these recent acquisitions.

Oracle's President Charles Phillips said in a statement that the company's all cash offer provides the "best value for BEA's shareholders and the best home for BEA's employees and customers." He also indicated that the current proposal is the result of ongoing discussions with BEA's management over the last several years.

BEA's Future in Oracle's Hands

In addition, Phillips said that Oracle would protect the investment customers have made in BEA's products by supporting those customers and products for years to come. As evidence of this "continuing support commitment," Phillips pointed to Oracle's recent acquisitions of Siebel and PeopleSoft.

Perhaps not coincidentally, Oracle's offer letter comes on the heels of SAP's recent agreement to buy Business Objects for $6.7 billion. SAP is the fourth largest software seller and the top player in business management programs. Microsoft is the largest software maker, with IBM second.

Oracle's Roll-Up Strategy

Industry analyst Zeus Kerravala with the Yankee Group said Oracle's move to acquire BEA is a sign of continued consolidation in the software industry and a competitive move against the industry leaders.

"This is part of Oracle's roll-up strategy...