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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Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer LIBOR Warning: Neither BBA Enterprises Limited, nor the BBA LIBOR Contributor Banks, nor Reuters, can be held liable for any irregularity or inaccuracy of BBA LIBOR. Disclaimer. Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.