Repeated Bidding?

The article is not only about biding and giving the right price. It about the game that BEA as a company willing to be acquired by bigger market players, want to initiate with the potential buyers. In order to achieve the needed price BEA tries to involve other bidders and refused Oracle’s first offer. I believe that the game between Oracle and BEA will be a repeated one and probably other players will offer other payoffs.

http://online.wsj.com/article/SB119218622871657224.html?=djemalert&mod=djm_HAWSJSB_Welcome

Oracle Discloses Pitch for BEA
Offer of $6.7 Billion Too Low, Target Says;Icahn Presses for Sale
By VAUHINI VARAOctober 13, 2007; Page A3
Larry Ellison, founder and chief executive of Oracle Corp., may be entering the end game in his four-year play to consolidate the business-software industry around his company.
The software giant disclosed a $6.7 billion unsolicited offer to buy BEA Systems Inc., a Silicon Valley company that helped build the market for Web-services software. The bid, a 25% premium to BEA's closing price Thursday, comes as activist investor Carl Icahn, BEA's biggest shareholder, has put pressure on the smaller software company to sell itself.
BEA responded that the offer significantly undervalues the company, but didn't reject it outright.
An acquisition of BEA would be the second-biggest purchase ever by Mr. Ellison. In June 2003, he launched a hostile bid for rival PeopleSoft Inc. that included a drawn-out battle to overcome the smaller company's antitakeover defenses.
An extended acquisition spree followed. If it lands BEA, which Mr. Ellison has long coveted, Oracle would be close to meeting its goal to be a leader in most big-business software categories.
The bid highlights two opposing views of the industry's future. When Mr. Ellison began predicting consolidation in the software industry, BEA CEO Alfred Chuang argued that smaller software companies like his remain independent by innovating quickly.
Recent events seem to be supporting Mr. Ellison's view, and are giving big shareholders the opening to press managements to sell. "The smaller software companies are going to have more and more trouble competing, so there's a great need for a catalyst like me," Mr. Icahn said in an interview.
Mr. Icahn has been increasing his stake in BEA in the past several weeks and now owns 13.22% of the company's shares. He said he is "certainly happy" about Oracle's bid, adding that BEA "definitely should be taken over." He said the company "would be a great fit with Oracle" but added that he "would like to see it command a better price" and named SAP AG, International Business Machines Corp. and Hewlett-Packard Co. as other possible acquirers.
BEA, of San Jose, Calif., has been battling IBM, Oracle and others in the market for "middleware," an umbrella term for several kinds of programs that act as a foundation for building custom business programs. BEA, with a product called WebLogic, pioneered one category of middleware called application servers that are used to build Web services.
IBM and Oracle have been able to use their massive sales forces, and steep discounting, in competing against BEA. Last year, IBM had 32% share of the middleware market, compared with 10% for BEA and 9% for Oracle, according to research firm Gartner Inc. Buying BEA would make Oracle the No. 2 middleware vendor after IBM.
A person familiar with IBM's thinking said IBM is unlikely to enter the bidding fray, because IBM typically buys small software companies, and the Oracle offer for BEA is already about twice as much as IBM has ever paid for an acquisition. Plus, this person said, there is enough overlap between IBM's WebSphere software and BEA products that it would probably raise antitrust scrutiny. An IBM spokesman declined to comment.
A person familiar with SAP's thinking said the company would be unlikely to be interested in buying BEA because it wants to focus on a competing product, called NetWeaver. An SAP spokesman declined to comment.
An H-P representative said H-P isn't interested in entering BEA's market, but declined to comment specifically on whether it had any interest in buying the company.
The Oracle bid comes at an awkward time for BEA, because the smaller company is in the midst of restating its quarterly earnings over a 10-year period because of issues associated with the way it accounted for stock options.
According to documents made public yesterday, Oracle co-president Charles Phillips on Tuesday sent a letter to BEA offering to buy the business-software maker, in a bid that values BEA at $17 a share. "We believe our all-cash offer provides the best value for BEA's shareholders and the best home for BEA's employees and customers," Mr. Phillips said in the letter, adding, "We look forward to completing a friendly transaction as soon as possible."
Thursday, BEA wrote back to Mr. Phillips saying "BEA is worth substantially more to Oracle, to others and, importantly, to our shareholders than the price indicated in your letter." The company added that "the absence of current financial information in the public markets limits investor visibility into our performance."
Following word of the bid, BEA's stocked surged 38% to $18.82, up $5.20, on Nasdaq.

---- William Bulkeley, Don Clark, and Ben Charny contributed to this article.
Write to Vauhini Vara at vauhini.vara@wsj.com