NEW YORK - Oracle Corp., the world's third-biggest software maker, agreed to buy BEA Systems Inc. for $8.5 billion in cash after a three-month fight, capitulating to the board's demands for a higher price.
BEA investors will get $19.38 a share, 24 percent more than Tuesday's close, Oracle said yesterday. BEA, the maker of software that lets programs share information, rejected an unsolicited bid of $17 in October, and asked for $21, which Oracle called "impossibly high."
The purchase, Oracle's largest in three years, marks a victory for billionaire investor Carl Icahn and a reversal from last month, when Oracle said a friendly deal couldn't be done with the current board. Oracle chief executive Larry Ellison is looking to BEA to help him maintain the pace of sales amid slowing growth in technology spending.
"It is a lot more than what they initially offered," Edward Lewis, a partner at Atlantic Equities LLP in London, said. "BEA managing to flush out a higher offer from Oracle is obviously proof that their strategy worked."
Icahn, 71, BEA's largest shareholder with about 13 percent, said yesterday he supports the bid. He had pressed the board to agree to a takeover and sued in Delaware demanding that shareholders get the right to vote on a sale.
Icahn could use a win as some of his investments perform poorly. He owns about 14.5 percent of Florida home builder WCI Communities Inc., which has fallen 89 percent in the past year.
Oracle, based in Redwood Shores, Calif., rose 61 cents, or 2.9 percent, to $21.92 on the Nasdaq Stock Market. BEA, based in San Jose, Calif., surged $2.88, or 18.5 percent, to $18.46. The Standard & Poor's 500 Information Technology index has dropped 11 percent this year on concern that companies are cutting technology budgets.
The new price is expensive, based on BEA's revenue from maintenance contracts over the past 12 months, according to Bear Stearns & Co.'s John Di Fucci, calculating the price at about 9.7 times maintenance revenue, compared with the 5 to 8 times sales Oracle typically pays.
