Oracle makes offer for BEA Systems

Friday, October 12, 2007

Press release by Oracle:

"Oracle Corporation (NASDAQ: ORCL) today confirmed that it delivered a letter to the Board of Directors of BEA Systems, Inc. (NASDAQ: BEAS) on October 9 in which Oracle proposes to acquire BEA for $17.00 per share in cash. The $17.00 per share offer is a 25% premium over yesterday's closing price of $13.62."

If I did not know anything about acquisitions, I would think that this is Larry Ellison's reaction to the Business Objects acquisition by arch rival SAP (don't get mad.... get even). But as these acquisitions and offers usually take quite a long preparation time, I do not think this is a reaction to the SAP activities.

Leaves me wondering though what the rationale is for Oracle to make the offer for BEA. Oracle states in its press release that "the acquisition of BEA by Oracle will enable an increase in engineering resources that will in-turn accelerate the development of our [Oracle's, LB - sic] world-class suite of middleware". Which might mean that Oracle is facing some challenges, maybe even problems with its current Project Fusion program. Putting it all together is one of the key challenges Oracle faces in its Fusion endeavor, and the acquisition of the brightest engineers from BEA could be considered a way to face this challenge. This should not come as a surprise as I have said before that one of the key drivers for Oracle's acquisition wave was "acquiring the people who created the technology".

Also, the potential acquisition of BEA supports my prediction and observation that increasingly pure-play vendors are disappearing, as the functionality of their products is incorporated into enterprise applications, OS and hardware.
Maybe this is the moment to say: integration middleware is now officially commoditized.

Categories: BEA, Oracle, prediction, acquisition, strategy, commoditization, enterprise-applications