Oracle Offers $6.6 B in Cash for BEA

123jump.com Staff
12 Oct, 2007
New York City

Oracle offered to purchase BEA Systems for $6.6 billion in cash or $17 per share, 25% premium from the close on Thursday price. BEA has attracted interest of Carl Ichan who is known for his agressive tactics with company management. He recently raised his stake int the company to 13% and pushed management to look for a buyer. Oracle cash offer lifted the stock in early trading to $18.

[R]10:00AM New York – Oracle offer $6.6 billion in cash for BEA Systems.[/R]

Oracle Corp ((ORCL)) offered $17 per share to software system developer BEA Systems Inc ((BEA)). The BEA stock has come under pressure in the last six months of trading as it has fallen as low as $10.50. The stock rebounded today at the opening to $18 on the news.

Oracle Corporation today confirmed that it delivered a letter to the Board of Directors of BEA Systems, Inc. on October 9 in which Oracle proposes to acquire BEA for $17.00 per share in cash. The $17.00 per share offer is a 25% premium over yesterday's closing price of $13.62.

The letter indicates that Oracle is prepared to proceed immediately to a process that leads to a definitive agreement. 'We have made a serious proposal including a substantial premium for BEA,' said Oracle President Charles Phillips. 'We believe our all cash offer provides the best value for BEA's shareholders and the best home for BEA's employees and customers. This proposal is the culmination of repeated conversations with BEA's management over the last several years.

BEA has faced stagnant earnings in the last three years and battled for market share with IBM. The stock in the last two years has declined from its high $17 to as low as $10.50.

At the opening three popular averages were trading higher. Dow Jones Industrial Average gained 21 to 14,034, Nasdaq increased 11 to 2,783, and S&P 500 increased 2 to 1,556.


[R]6:00AM New York, 7:00PM – Weak consumer confidence and rising prices in Japan are likely to affect retail sales.[/R]

In Tokyo trading Nikkei 225 slipped 0.73% or 127.81 to 17,331.17. Of the Nikkei 225 stocks 17 rose, 145 fell and 9 were unchanged. Hitachi Zosen led gainers for the second day rising 4.37% on firming freight charges.

Economic and Social Research Institute at the Cabinet Office of Japan said today that Consumer Confidence Index of households was nearly flat, rising marginally to 44.1 in September from 44 in August. According to the monthly survey, overall livelihood index was at 42.2 in September from 41.9 a month earlier. However, income growth component of the index remained stagnant at 42.4, while the willingness to buy durable goods component was measured at 45.5 from 44.7 in August. This survey of households with two or more people indicated stagnant wages are dampening spirits while costs of food and other consumables are rising.

Economists believe the survey, which covers 6,720 households measuring consumer perceptions, price expectations and state of households, shows the effects of shrinking disposable incomes, high taxes and the government loss of pension records in May.

Bank of Japan said today in its monthly report on corporate goods price index or producer price index, the domestic goods price index rose 1.7% after rising 2% in August. The export price index slid 0.7%, while the import price index was at 2.1% year on year. Even though the core consumer price index which excludes food and energy prices is declining, consumers are facing higher prices of food the coming weeks. Several food makers have increased or have announced to increase food prices.

The weakening dollar and increasing commodity prices is expected to trim Japan’s slowing wholesale inflation. However, Minister of Economy and Fiscal Policy Hiroko Ota said today the government will continue to monitor the effect of rising commodity prices on households and small companies. Confectionery and noodle prices are expected to rise by an average 8% in December.

Private credit research agency Tokyo Shoko Research announced today that debts left by bankrupt companies rose for the first time in 17 years, soaring 17.8% in the six months between April and September to 2.98 trillion yen.

Fast Retailing said its profit for the fiscal year 2007 ending in August fell to 31.7 billion yen or declined 21.4% from a year ago. Net sales rose 17% to 525.2 billion yen, while operating income and net income plummeted 7.7% to 64.9 billion yen and 21.4% to 31.7 billion yen respectively. Promotional expenses and personnel costs resulted in the decline in profits. The UNIQLO unit, which contributes 81% of consolidated sales, realised increased revenue from increased store numbers and existing store sales. However, Hong Kong and South Korean operations posted a profit reducing the total loss in the unit.

The company press release added that the revenue at UNIQLO CO., LTD., domestic UNIQLO operation that constitutes roughly 81% of total consolidated sales, rose 7.9% in the year to August 2007. However, operating income slipped 7.1% year on year to 64.0 billion yen. A 1.4% increase in existing store sales, and an additional 27 direct-run UNIQLO stores contributed to the rise in overall net sales. The total number of direct-run UNIQLO stores stood at 730 at end August 2007, or 748 stores including franchises. However, gross margin to net sales fell 2 points year on year in the six months to February 2007 as the warm winter forced us to offload more winter stock at discounted prices.

The company announced 130 yen per share dividend.

The company estimated net sales for the year 2008 of 570 billion yen, up 8.5% and increase of 12.1% in operating income to 72.8 billion yen.

Sony Ericsson Mobile Telecommunications Limited’s net income fell from 298 million euros in the third quarter last year to 267 million euros this year. The company, a joint venture between Sony Corporation and Sweden’s Ericsson, earnings were affected as it sold more of low margin models.

According its press release units shipped in the quarter reached approximately 26 million, a 31% increase compared to the same period last year. Sales for the quarter were Euro 3,108 million, representing a year-on-year increase of 7%. Income before taxes for the quarter was Euro 384 million, representing a year-on-year decrease of 11%, which reflects the exceptional third quarter the company experienced in 2006. Net income for the quarter was Euro 267 million. In line with Sony Ericsson expectations, the increase in low- and mid-tier priced phones in the product portfolio in the third quarter resulted in a decline in Average Selling Price (ASP) to Euro 120.

Sony Ericsson forecasts that the 2007 global handset market will be above 1.1 billion units. The company gained around 1% of market share compared with the same period last year and finished the third quarter at over 9%.

Sony Corp closed down 4.33%.

Crude oil prices also rose for the third day, gaining 2.2% to 83.08 per barrel. Inpex rose 3.20%, Mitsubishi Corp soared 2.45% and Nippon Oil gained 0.64%.

Of the index shares shipbuilder Hitachi Zosen led gainers climbing 4.37%, followed by rises of 3.20% in Inpex Holdings, 3.03% in Jtekt Corp, 2.90% in Yokogawa and 2.82% in Clarion Company Limited.

Nikon Corp led declining stocks in the index shedding 8% after an analyst at Goldman Sachs in Japan recommended investors to sell, followed by losses in Fast Retailing of 5.99%, in Taiyo Yuden Company of 5.80%, in Pioneer Corp and Sony Corp of 4.33%.

Technology shares also fell as well after brokerages forecasted that prices of chip and screen-making equipment would fall. Nikon Corp fell 8% to 340 yen and Dainippon declined 8.6% to 692 yen and Tokyo Electron tumbled 1.22%.

Financial stocks also slumped after the European Central Bank said that interest rates may have to be increased thereby tightening the credit market. Mitsubishi UFJ slid 0.68% and Mizuho Financial Group plunged 3.70%.