BOSTON.- BEA Systems Inc said on Thursday it is willing to sell itself for $8.2 billion, but the price was rejected as “impossibly high” by Oracle Corp, the only company that has publicly expressed interest in the software maker.
BEA, which is under pressure from billionaire investor Carl Icahn to find a buyer, said it was worth $21 per share, which is a 24 percent premium to the $17-per-share bid that Oracle offered on October 12.
Oracle said BEA’s price represented an 80 percent premium to its shares before activist shareholders started pushing for a sale of the company, and nearly 11 times BEA’s revenue from software maintenance services in the last 12 months.
“Nobody would seriously consider paying that kind of multiple for a software company with shrinking new license sales,” Oracle President Charles Phillips said in a letter to BEA’s board.
He said Oracle was standing by its $6.7 billion bid which expires at 5 p.m. California time on Sunday, adding “at which time Oracle will move on and evaluate other potential acquisitions.”
Shares of BEA had closed at $17.53 on the Nasdaq, down 2 cents as investors appeared to also believe that the $21 price set by the business software maker may be too optimistic.
Some analysts still thought a deal was possible as BEA’s software, called middleware because it helps connect business computer systems, could be added to Oracle’s database programs to help it better compete with SAP AG.
“Nobody is more interested in this than Oracle,” said Bart Narter, an analyst with financial research and consulting firm Celent. “I think there is a lot of posturing. Maybe they’ll get a little higher price. Maybe.”
Representatives for BEA could not be reached for comment. The $21 price had marked the first time BEA gave a price point for negotiations with Oracle, the world’s third largest software company with a market value of about $100 billion.
“Over the last several weeks, Oracle has repeatedly asked us for the price at which we would be willing to begin negotiations,” BEA’s board said earlier on Thursday. BEA is “prepared to authorize negotiations with third parties including Oracle at a price of $21.00 per share,” it said.
Talk of a buyout for BEA began in August when Icahn said he had begun acquiring shares in the business software maker and called on its board to put the company up for sale. Chief Executive Alfred Chuang had rebuffed the billionaire activist investor, who boosted his stake to about 13 percent, making him the company’s biggest shareholder.
Besides Oracle, other companies that have been touted as possible buyers of BEA include International Business Machines, Hewlett-Packard and SAP.
An SAP spokesman said the company was not interested in buying BEA, while representatives for Hewlett-Packard and IBM declined comment. Icahn could not be reached for comment.
Jefferies & Co. analyst Katherine Egbert said earlier on Thursday another suitor may be talking to BEA behind the scenes. “For the BEA board to make the claim that they are worth $21 (per share) without any detailed supporting analysis could mean that they have another interested party,” she said.
BEA said that after consulting with its investment bank, Goldman Sachs, it believes Oracle or another company would still see earnings benefit if it paid $21 per share or higher.
But Phillips said in his letter, “We believe that your counterproposal at $21 per share price is an impossibly high price for Oracle or any other potential acquirer.”