Oracle Drops Bid for BEA Systems

Oracle said Sunday that it was dropping its effort to acquire BEA Systems over disagreements surrounding the valuation of the company.

BEA had insisted on a valuation of about $8.2 billion, or about $21 per share. This was significantly higher than Oracle's offer of $17 per share, which comes out to about $6.7 billion.

In a statement about its termination of the deal, Oracle essentially told BEA shareholders to not expect another offer as high as its final offer in the future.

"Over time many things can change: BEA's business might materially weaken, the stock market can fall further from its recent record highs, or Oracle may have committed its capital elsewhere," the company said in a statement.

Oracle's move is sure to upset activist investor Carl Icahn, who holds a 15 percent stake in BEA. He had campaigned for the company to allow the shareholders to choose the future of the company, and threatened a proxy battle for control of the company.

While BEA had not responded to Oracle's termination of its offer as of press time Monday, it posted a public response to Icahn's demands on its website.

"It is important that there be no misunderstanding of the Board's position," the company said. "We are opposed to selling the company at $17.00 per share. We are not opposed to selling the company."

BEA also claims that its inability to file full financial results since the quarter ending in April 2006 has also muddied its value. The company found irregularities in stock option grants around that time and is apparently still working to fix it.

Activist investors within the company have been pushing for a sale since August, when Icahn began acquiring shares in the company and called for a sale. While the stock rose to nearly $19 per share, the company's stock has since fallen below the $17 per share offer from Oracle.