BEA Systems’ (BEAS) Mad (As In “Insane”) Board

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BEA Systems (BEAS) has a firm $17 a share offer from Oracle (ORCL). The company thinks it could get more, and, so did the market. The stock moved above $18 on news of the offer. BEA has Carl Icahn breathing down its neck to sell the company.

Oracle has give BEA a Sunday deadline to accept a deal. BEA’s board say "no dice". It can do better. But, with Goldman Sachs as its banker, it has not done better. Other possible buyers like IBM (IBM) and SAP (SAP) have not stepped up.

The BEA board is playing with fire. If the company had shown that it was worth well above $17, it would be one matter. But, the stock has not traded at that level since 2002. Assuming the markets are efficient in valuing companies, especially over long periods of time, the Oracle offer is on the high side of fair.

The board needs to wise up. That is not a white knight on the distant horizon. It’s only a mirage.

Douglas A. McIntyre