Oracle to Buy BEA Systems for $8.5 Billion

UPDATE 2: The middleware vendor accepts Oracle's overtures this morning.

Oracle has agreed to buy BEA Systems for about US$8.5 billion, or $19.375 per share, the companies announced.

BEA's board of directors turned down an initial offer from Oracle of $17 per BEA share in October, saying it "significantly undervalues BEA." Oracle in turn dismissed the BEA board's counteroffer of $21 per share as "impossibly high."

But on Wednesday, the companies split the difference.

"This deal is a very big step toward completing our vision of becoming the strategic enterprise software vendor of choice," Oracle CEO Larry Ellison said during a conference call Wednesday, apparently reading from a prepared statement. "Simply stated, this combination of BEA gets us where we need to be ... across the software stack, in more verticals and more regions across the world."

Both companies have "numerous" middleware offerings, but BEA's line is nonetheless "overwhelmingly complementary," Ellison said.

The deal will provide scale to Oracle's middleware business, and ultimately create "the leading platform for customers for to manage and deploy enterprise applications," he asserted.

Beyond technology, acquiring BEA will bring valuable human capital over to Oracle, according to Ellison: "Middleware requires a highly specialized, technically sophisticated sales force. In a very competitive market, it's difficult to find that kind of talent."

Most BEA customers are already Oracle customers, according to Ellison.

Oracle "plans to aggressively support BEA products in a manner similar to other acquisitions," he pledged.

BEA's chairman and CEO, Alfred Chuang, said that Oracle and BEA officials will be working on a comprehensive integration plan in the coming months.

"We recognize that a smooth and quick integration is essential to the success of the transaction," he said.

The executives did not take questions following the brief call.