Oracle, BEA Systems in $8.5B deal

Activist investor Carl Icahn, BEA's largest shareholder, had been advocating a merger.

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By Aaron Smith, CNNMoney.com staff writer

NEW YORK (CNNMoney.com) -- Software giant Oracle Corp. reached a deal to buy rival BEA Systems Inc. for $8.5 billion Wednesday, just months after its initial offer was rebuffed.

Oracle agreed to pay $19.375 in cash for each share of BEA, representing a 24 percent premium to where BEA's shares closed Tuesday.

Oracle said the deal is worth $7.2 billion, since BEA has $1.3 billion in cash on hand. The deal is expected to close in mid-October.

"For Oracle, this deal is a very big step towards completing our [goal] of being a strategic software vendor of choice for our customers," Oracle CEO Larry Ellison said during a conference call with investors.

Ellison said BEA CEO Alfred Chuang was "a pioneer in middleware," a type of software used by big businesses. With BEA under its wing, Ellison said he intends for Oracle to become a leader in middleware.

Shares of both companies moved on news of the deal. BEA (BEAS) soared 19 percent in morning trading, while Oracle (ORCL, Fortune 500) ticked lower 1 percent.

Oracle originally approached BEA back in October, when it made a $6.7 billion bid for the firm.

That offer was rejected by the BEA board, which said it wanted an offer of at least $21 a share.

But activist investor Carl Icahn supported a buyout. Icahn, who owns 51.8 million shares, or about 12.8 percent of the company, is BEA's biggest shareholder.

Redwood City, Calif.-based Oracle has a market capitalization of about $110 billion and has acquired more than 30 companies over the last three years, including PeopleSoft for more than $10 billion.

Over that period, Oracle's stock has risen about 60 percent, while BEA's shares have soared more than 80 percent. To top of page

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Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer.

Morningstar: © 2014 Morningstar, Inc. All Rights Reserved.

Factset: FactSet Research Systems Inc. 2014. All rights reserved.

Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved.

Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor’s Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2014 and/or its affiliates.