The announcement before the stock market opened sent BEA's shares sharply up when trading started, up 19 percent to $18.53 a share. Oracle was slightly down at $21.29 a share.
The agreement calls for Oracle to acquire all outstanding shares of BEA for $19.375 - a hefty premium over the $17 a share Oracle originally offered, but less than the $21 a share that BEA's board of directors was demanding.
For that price, Oracle gets the company plus its $1.3 billion cash on hand. Oracle executives expect it to also boost the company's earnings; Safra Catz, Oracle president and chief financial officer, said in a statement released today that Oracle expects the deal to add to Oracle's earnings "by at least one to two cents."
But analysts had noted that Oracle could use much of BEA's middleware technology, which is compatible with Oracle's Fusion software. Oracle CEO Larry Ellison said the addition of BEA products and technology "will significantly enhance and extend" Oracle's own suite of middleware products.
Alfred Chuang, BEA's chairman and CEO, said the transaction "is in the best interest of our shareholders. I am confident our innovative products, talented employees and worldwide customer base will be key
BEA came under pressure to sell after Wall Street investor Carl Icahn began acquiring shares in the San Jose company last year. He eventually became the largest shareholder, Originally, Icahn had agreed with BEA's rejection of Oracle's $17 a share offer, but later he began agitating for a sale at that price. But Icahn fell silent after signing a non-disclosure agreement and getting a close look at BEA's technology and financials.
"Both companies will do very well," said Trip Chowdry, managing director of Global Equities Research. He said BEA's social computing products will give Oracle an entry into that growing sector. Customers of BEA should be pleased, he said, "because they were wanting BEA to be bought by Oracle as 70 percent of Oracle database customers are also BEA's customers."
The deal is expected to close by the middle of this year, subject to BEA stockholder and regulator approvals.
In morning trading, shares of BEA jumped 19 percent, or $2.96, to $18.54. Oracle investors were less excited, pushing shares of the company up 13 cents, or 0.61 percent, to $21.44.