Oracle Continues Middleware Market Gains With BEA Buyout

Oracle initially bid $17 per share or $6.6 billion when it first offered to buy BEA back on Oct. 12. As recently as mid-December Oracle executives said BEA's directors were still resisting Oracle's offers. But at some point Oracle decided to sweeten the pot and the two companies reached a deal.

"For Oracle, this deal is a very big step toward completing our vision of becoming a strategic enterprise software vendor-of-choice for our customers with industry-leading products and a world-class technology solution at every level of the stack and across industry verticals," Oracle CEO Larry Ellison said during a teleconference announcing the agreement.

The value of the deal is put at $7.2 billion, net the $1.3 billion in cash BEA has on hand. Oracle expects to close the deal, which is subject to shareholder and regulatory approvals, by the middle of the year.

Jon Walker, director of software sales at Champion Solutions Group, a Boca Raton, Fla.-based solution provider that partners with both companies, wasn't surprised that Oracle was ultimately able to seal the deal, given its experience in acquiring so many companies in recent years. He said the acquisition will provide both Oracle and BEA channel partners with the ability to offer customers a broader range of products.

"It expands our reach. Now I can offer a complete portfolio [of middleware products] for across the enterprise," said Walker. The acquisition also means Walker can work with a single, consistent program for both vendors' products -- instead of approaching customers wearing two hats -- and possibly expand his BEA software sales beyond the regions in the Americas he is currently limited to.

A Forrester Research report said Oracle is acquiring both BEA's respected middleware products and its base of large corporate customers, making it second only to IBM in the middleware arena.

While Ellison said Oracle's Fusion Middleware software will remain the core of its middleware product line, he said BEA's products are complementary to Oracle's and such products as BEA's WebLogic application server will join Oracle's middleware lineup. Ellison said buying BEA makes Oracle the leading vendor in messaging and transaction processing platforms and will help accelerate adoption of Java-based middleware versus Microsoft's middleware products.

Oracle has acquired more than 40 software companies over the last four years, including such big companies as PeopleSoft, Siebel Systems and J.D. Edwards, and has promised to support those applications indefinitely under its "Applications Unlimited" program. In the conference call Ellison promised that BEA products would be supported under the same program.

"Oracle's strategy over the past three years has to be admired," said Murray Beach, managing director of TM Capital, part of M&A International, a mid-market merger and acquisition specialist, in an e-mail. "They have consistently made shrewd and farsighted acquisitions. They have stolen the march on SAP and IBM in several categories, and their product plan is to be envied. We expect Oracle to continue to be an acquirer of best-of-breed technologies."