Daily Archives: October 23, 2007

BEA Counters Oracle, Letter for Letter

As I had anticipated earlier this afternoon, Alfred Chuang and his board at BEA unambiguously rebuffed the public ultimatum that Oracle issued earlier today regarding its increasingly bellicose bid to acquire one of few remaining enterprise-software companies it doesn’t already own.

The BEA missive is a well-worded, concise rejoinder to Oracle’s hostile overture. Essentially, the BEA reply states that the $17-per-share takeover proposal from Oracle undervalues the company. It also says that BEA’s board of directors is fulfilling its fiduciary obligations by ensuring that it receives fair value for BEA as a corporate asset.

BEA also implicitly rebukes Oracle for its wildly entertaining, carnival-like approach to deal negotiation:

BEA’s Board has not indicated that it would be opposed to a transaction that appropriately reflects BEA’s value, reached through a reasonable process. To the contrary, the Board is keenly aware of its fiduciary duties to shareholders and is acting accordingly. Indeed, BEA presented to Oracle standard and customary terms under which BEA would share information regarding a potential transaction, assuming Oracle were to propose a reasonable price, but Oracle has rejected
such a process.

If Oracle is genuinely interested in acquiring BEA, you are fully capable of proposing a reasonable price to the BEA Board or taking any offer you wish directly to BEA shareholders.

Unless Larry Ellison goes ballistic with rage, I fear this is the last installment of the public imbroglio between the boards of Oracle and BEA. The action will occur behind the scenes henceforth.

Oracle Issues Takeover Ultimatum to BEA’s Board

In a calculated move that intensifies the friction between the boards of directors of the two companies, Oracle sent a public letter to BEA’s board today threatening to rescind its $17-per-share takeover offer by Sunday unless BEA agrees to tentatively accept the proposal and put it to a shareholder vote.

Oracle’s is using a classic tactic from the threadbare playbook of  hostile takeovers. As you will recall, Oracle knows a thing or two about hostile takeovers, having successfully executed one in its protracted staredown of the board of directors at PeopleSoft.

Despite Oracle’s protestations that it has no intention of waging a prolonged battle of attrition to acquire BEA, one has to wonder. Oracle might not want to take that long, ugly path — who does? — but it might tolerate such as course of action if Larry Ellison and his lieutenants are convinced BEA is of strategic importance and cannot be allowed to fall into other’s hands.

Oracle clearly feels there’s a weakness in the solidarity of the BEA board that it can exploit. Perhaps that’s true, but from this vantage point I think CEO and Chairman Alfred S. Chuang has enough support to dig in his heels and resist Oracle’s bully-boy gambit.

So, presuming that BEA’s board does not capitulate by Sunday, what happens next? Will Oracle walk away? In the short term, I don’t think it has a choice in the matter. Oracle would lose credibility if it continued to pursue BEA after having its ultimatum rejected. Larry Ellison wouldn’t want to look weak.

Still, in the unlikely event that BEA should find another suitor, now or a few months from now, don’t be surprised to see Oracle make a counterbid.

Symantec Could Announce Vontu Acquisition Tomorrow

Unless the deal has fallen through over valuation, it’s increasingly likely that Symantec will announce its long-rumored acquisition of data-leakage prevention specialist Vontu tomorrow.

Symantec is slated to hold its second-quarter earnings conference call at the close of stock trading tomorrow. That would be as good at time as any to spring the news of its Vontu acquisition on the world.

Not many observers would be surprised. Rumors are premature reports of an acquisition announcement have been prolific during the past week or so, with several technology-related publications and websites taking positions on when the deal would go down.

Readers of this site — yes, all two of you — might recall that I mentioned talk of a Symantec acquisition of Vontu last year. The companies have been getting closer, technologically and otherwise, for some time. Symantec might have made this deal earlier, but it balked at the asking price Vontu and its agents had demanded.

Apparently things have changed. Recent reports have suggested that Symantec will pay up to $350 million for the privately held Vontu, which is said to have revenues of about $30 million.

Perhaps the ongoing consolidation in the space gave Symantec some buyer’s leverage.

Dell’s Channel Challenge

As news broke yesterday that Dell products — a limited selection of notebook and desktop PCs as well as monitors, printers, and ink cartridges — would be sold as of November 11 in 1,400 Staples Inc. stores across America, I wondered again how long Dell could manage to both sell its products directly online and through channel partners.

Yes, not all Dell products are available in the stores of its retail partners. Some Dell notebooks and desktops can only be ordered directly from the company. Moreover, Dell is trying hard to position this move as part of a strategy to provide its products wherever and whenever customers wish to buy them.

But the seismic shifts in the PC market, which has seen fast growth in emerging national markets such as China and India and a sharp preference for notebooks over desktops nearly everywhere, makes it difficult for Dell to walk this channel-conflict tightrope.

Staples definitely sees a competitive dynamic in its relationship with Dell, as the following excerpt from a Wall Street Journal story makes evident: 

For Staples, the agreement is part of a long-running "Easy Button" marketing effort that aims to simplify shopping for its customers, Staples merchandizing head Jevin Eagle said. "Our customers will be able to touch and feel the products (as opposed to viewing them on a computer screen) before buying a Dell product and they’ll be able to get it on the same day."

There’s the rub for Dell. It’s new channel partners will not only be selling its products as competitive offerings to other PCs and peripherals already available at retail, but they’ll also be selling Dell products in competition against Dell itself.

Increasingly, no matter what Dell says, it will be in channel conflict with its retail partners. There are ways to resolve such conflict, of course, and it will be interesting to see how authoritatively and quickly Dell takes action.