BEA rejects Oracle's takeover offer

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Business software and integration systems specialist BEA has rejected competitor Oracle's $6.66 billion (£3.33 billion) acquisition bid, claiming that the offer undervalues its worth.

Oracle made the unsolicited takeover bid last week just a few days after its rival SAP announced similar plans to bolster its portfolio by acquiring Business Objects.

BEA remained tight-lipped when news of the acquisition bid initially went public but has now posted on its website a copy of a letter its vice president William Klein sent to Oracle's president Charles Phillips, prior to the offer being disclosed.

"Our Board of Directors acknowledges your interest in BEA as expressed in your letter of October 9, and is considering it in consultation with our advisors. It is apparent to our Board, however, that BEA is worth substantially more to Oracle, to others and, importantly, to our shareholders than the price indicated in your letter," the correspondence stated.

Klein's letter also requested more detail as to how a takeover would come about and appeared keen to avoid a lengthy process due to the continuing competitive nature of the two companies.

"In the mean time, our Board would appreciate greater clarity about what you mean by 'proceed... to a process.' As we have made clear to you in previous discussions, we are very sensitive to the fact that Oracle is a direct competitor of BEA. Therefore, the Board cannot consider any process which is long in duration, open-ended in nature, or would divulge competitively sensitive information which could materially harm our business and our shareholders' interests," he said in the letter.

Oracle's Phillips responded to BEA's letter, claiming that the company was still committed to its original offer price and would remain "available to discuss and complete a transaction quickly and efficiently".

"We believe that it is important to clarify the sequence of activities that have transpired over the past few days," the letter said. "Upon receipt of Bill Klein's letter dated October 11, I contacted him to address any process concerns. Bill and I agreed on an accelerated process that would be, by anyone's standard, 'short in duration' and not 'open-ended' and that would permit BEA to not 'divulge competitively sensitive information.'

"BEA's management agreed to meet this morning at 10:00am Pacific time to commence a process intended to result in the execution of definitive agreements before the open of business on Monday, October 15. Unfortunately, BEA cancelled the meeting late last night and declined our invitations to reschedule. In my subsequent discussions with Bill earlier today, I asked whether there was any process that BEA would prefer to follow to move towards a friendly transaction and was told that BEA had no such process in mind... We are available to proceed immediately with a process that would lead to a friendly transaction."

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