Oracle today confirmed that it has offerd $17 a share in cash for BEA Systems – or 25% more than the BEA’s trading price when it made the offer on 9 October. BEA is currently trading at $18.10 per share, the price having rocketed on news of Oracle's bid.
Oracle's offer values BEA at about £3.28bn. It says it is prepared to proceed immediately to a process that leads to a definitive agreement.
"We have made a serious proposal including a substantial premium for BEA," said Oracle president Charles Phillips.
"We believe our all cash offer provides the best value for BEA's shareholders and the best home for BEA's employees and customers. This proposal is the culmination of repeated conversations with BEA's management over the last several years. We look forward to completing a friendly transaction as soon as possible."
Philips said Oracle intended to “protect the investment customers have made in BEA's products by supporting those customers and products for years to come."
BEA was a pioneer in the market for Java application server software used to deploy business applications, competing with products like IBM's WebSphere. It has been rumoured to be an acquisition target on numerous occasions but managed to retain its independence.
The acquisition of BEA by Oracle would enable an increase in engineering resources that will in-turn accelerate the development of our world-class suite of middleware, it said. Both Oracle and BEA customers "will benefit from this increase in engineering investment as they migrate to modern SOA technologies."
Oracle's Fusion middleware already includes many of the products BEA sells, including an application server, portal server and development tools, meaning the acquisition would create considerable overlap.
Stephen O'Grady, principal analyst with RedMonk, said Oracle's primary motive is likely to be the expansion and solidification of its presence in the middleware market.
"For all that BEA is not at the heights that it once was, it still owns solid accounts across global enterprises, and while Oracle obviously isn't lacking for presence in those accounts BEA's middleware is often more highly regarded," O'Grady said.
BEA was an early leader in applications servers but saw its lead whittled down gradually by IBM and later by Oracle, which built up a strong middleware business itself. Oracle CEO Larry Ellison often liked to predict BEA's demise, but the company has managed to cling onto a respectable market share by developing new SOA and business process management technologies.
It has been under pressure of late, however, notably from the billionaire investor Carl Icahn, one of BEA's large shareholders. Icahn said last month that he would press for the sale of BEA, believing the business would find it hard to stay afloat as an independent company.
In August BEA reported total revenue for its second quarter of £180m, up 7% from a year earlier, although revenue from new licence sales, an important measure of growth for a software company, declined by 9% to $123m. The company didn't report full figures for the quarter because of an ongoing investigation into its stock options grants.
Oracle, for its part, has been on the acquisition trail of late. Earlier this week it revealed plans expand its governance and compliance offering with the acquisition of LogicalApps.