Oracle to Buy BEA

The price works out to $19.375 per share.

So BEA's management, by holding out and demanding $21 when the subject first arose, in October, has done something positive for its shareholders. Oracle was at first offering only $17 a share, remember.

It looked at first as if BEA's management was going to face a proxy battle from a malcontented Carl Icahn. But they seem to have brought him on board successfully, and he'll reap his share of the control premium Oracle's paying.

It's nice to report that everybody is happy, isn't it?

Of course, Oracle's shareholders might not be entirely thrilled. The general rule is that after such an announcement, the market price of the target rises, and that of the acquirer falls.

Just before the original $17 offer, the market value of BEA shares was about $14. The market, presumably anticipating that there would be other bids, immediately brought that value up above $18 on the first offer, then it began to lose ground as the target resisted.

BEA's value fell below $14.75 last week, but recovered in the last three trading days, even though the broader market was taking a beating. Hmmm. Evidence word of a deal was leaking out? You didn't hear it from me. Anyway, at close of Nasdaq's business yesterday it was at $15.58.

This morning it'll presumably head up toward the value stipulated in the announcement. I'm guessing it won't quite get there, i.e. that there will be a discount allowing for the possibility that the deal will do awry between announcement and closing.

I'll next post here on Sunday. Perhaps that will be a good time to address the broad issue of insider trading in advance of such announcements.

POSTSCRIPT: I was right, above, to draw the inference that Icahn is on board with this deal. In was only an indirect inference when I wrote it, but after I had posted these thoughts, I learned of an explicit statement Mr. Icahn put out this morning: "This transaction is an excellent example of the great results that can be achieved for all constituencies when the shareholder activist is able to work cooperatively with management."