Oracle to snap up BEA

$8.5billion deal set to close by October

Oracle will finally acquire long term target BEA Systems after it announced an $8.5bn deal to buy the middleware vendor today.

According to the terms of the deal, Oracle will acquire all outstanding shares of BEA for $19.375 per share in cash, a significant increase on its failed attempt last October to purchase BEA, when the middleware vendor turned down Oracle's $6.7bn offer.

The deal will be a good strategic fit for Oracle as many of its customers are also BEA customers, while the latter's technology innovations in middleware will add extra value to Oracle's own Fusion middleware project, said Oracle chief executive, Larry Ellison.

"This is a big step towards completing our vision to be the software vendor of choice for customers … with a world class technology solution at every level of the stack," he added. "We believe it will accelerate Java-based middleware and SOAs for our customers and innovation in middleware technology."

Ellison explained that BEA products would continue to be supported in a similar way to those of other Oracle acquisitions including JD Edwards and PeopleSoft.

BEA's chief executive Alfred Chuang said the deal represented "the best way to maximise value for our shareholders" and that the firm would continue as normal until a "comprehensive integration plan" is formalised by both vendors.

The deal will bring increased business and a competitive product range to the Oracle portfolio, according to Bart Narter of financial research firm Celent.

"This acquisition brings best of breed functionality in the middle layer to the Oracle Fusion platform, the company’s SOA software," he said. "Oracle has been lagging in this area, and with this purchase, it can now go head to head with other companies such as IBM and SAP in offering SOA infrastructures to the largest enterprises."

David Mitchell of analyst firm Ovum said that although the two firms' product sets would have some crossover, they should be fairly complementary because both built on the same open standards.

"Oracle have also done very well in the past in cross-selling product lines in acquired customer bases," he added. "With BEA in the family it allows access to a wider customer base to cross sell to."

The deal, which has been approved by BEA's board of directors, is expected to close in mid October this year, according to Ellison.