Oracle indicated that it will let its $17 per share offer to buy BEA Systems expire without modifying it. “BEA shareholders should not assume that Oracle will renew its $17 per share offer in the future,” Oracle said in a statement. “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 BEA board had previously announced that it would negotiate with a buyer for $21 a share. The board has its own internal problems, as one of its main shareholders, financial mogul Cal Icahn, is battling to have the board consider the Oracle offer. Many financial analysts were also judging that Oracle price was generous. BEA share price was around $14 before the offer.
As the financial markets are dealing with uncertainty and the US economy may enter a recession phase, Oracle move to the sideline is the best strategic option. If BEA’s board keep refusing the offer, it will face a hard battle with Icahn and uncertainty about its future that could damage sales. If another buyer steps in, he will have to pay a higher (and maybe unjustified) price. Finally, if BEA ceases resistance, Oracle will get its target without having to increase its offer, but maybe Oracle offer was only meant to create a little bit of turbulence for its competitors.