Oracle to Acquire BEA Systems

Posted by Geoffrey Wiseman on Jan 17, 2008 07:53 AM

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BEA ,

WebLogic

Oracle and BEA Systems announced their agreement for Oracle to buy BEA's outstanding shares for $19.375 per share. BEA shares were trading at $15.58 before the offer.

This move has been underway for some time. As the Register puts it:

The two have been courting for some time although Oracle walked away from a possible deal in October after saying it could not better its offer of $17 a share. BEA had demanded as much as $21 a share.

At $19.375 per share, Oracle is paying $8.5bn for the middleware firm - or $7.2bn once BEA's cash pile of $1.3bn is removed from the equation.

As is typical in a merger of this size, the press releases are vague about the long-term resolution of the overlap in the product lines, in part because many of those decisions will be made in the months and years to come:

... customers can choose among Oracle and BEA middleware products, knowing that those products will gracefully interoperate and be supported for years to come ..

It would not be uncommon for there to be a long period where customers of both BEA and Oracle will get a chance to express their preferences through their purchasing while the parent companies consider the options, a transition period where a direction will be set and customers given opportunities to transition as necessary, followed by some projects seeing an eventual sunset and end-of-life because they overlap heavily with another product which may be better, or simply better-placed in the market.

In particular, the overlap is most striking with OC4J and WebLogic, there are many other examples from OpenJPA and TopLink, through Service-Oriented Architecture, Business Process Management and Enterprise Service Bus stacks, and even development environments with BEA Workshop and JDeveloper.

Reactions have been interesting, attracting media attention and community attention alike:

• The move is generally seen as a good one for Oracle, although the analysis for BEA seems less up-beat.
  

• Some people are uncertain about what this means:

  But I wonder what plans Oracle has for WebLogic. There sure are a lot of overlap with a lot of their existing products. Which ones will survive? Will WebLogic become like a block of cement around the feets [sic] of us developers, now Oracle owns it? I hope not.

• Many feel this spells the end for Oracle's application server:

  Given Oracle's history this could mean the end of the Oracle Application Server, to be replaced by Oracle WebLogic.

• Some feel like Oracle is trying to buy market share, continue its long chain of acquisitions, or trying to kill a competitor.

• Michael Cote points out that this could mean good things for OSGi, used by both BEA and Oracle.

Finally, the spectre of insider trading has already been raised, which might cast a pall over the acquisition.

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   the end of an era

   Jan 17, 2008 8:33 AM by Floyd Marinescu

   I think this marks the end of the era, not necessarily for better or for worse, just a big transition. Now there are only 2 major vendors selling appservers. Contrast this with 10 years ago when there were 20+ and few clear leaders. This leads me to wonder how much will Java EE as a standard really matter when there are only a couple of appservers out there that people are spending money on. Vendor lock-in does not restrict your choice much when there are only 2 choices. :) Floyd

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   Re: the end of an era

   Jan 17, 2008 8:42 AM by Geoffrey Wiseman

   I'm given to understand that the application server market is not the money-maker it once was, so this may be the normal route that technology takes, when technology becomes a commodity, then you start to see more consolidation. Certainly, I've been treating them as commodity for years, and it's been a long time since I've worked with a company that was still paying big money for a big-name application server. Still, it's quite the move. ItBusiness.ca says this is the last mega-merger we'll see for a while, while other articles I read while preparing this news seem to think there's more coming.

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   java era ended with xml integration standards

   Jan 17, 2008 9:22 AM by Erik Bengtson

   future is markup/drag and drop language based development and moving further into this direction. java and its standards will remain interesting to integrators and software industry. my take on this acquisition: OC4J, Oracle ESB, Oracle BPM, Oracle web services manager will be replaced by better BEA products, WebLogic, Aqualogic ESB, Aqualogic BPM, WL Integration, Aqualogic Enterprise Security. Oracle BAM will evolve from microsoft environment and will integrate Aqualogic BPM Bam functionality. Oracle and BEA have both licensed HP Systnet as their Service Registry, so this is an easy integration. BEA engineers will focus into Front End / Web 2.0 era..

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   Re: the end of an era

   Jan 17, 2008 9:38 AM by Fabio Mengue

   As a friend of mine said, this shows that the enterprise app segment got old. When your product don't differ that much from your competitors', you have to compete on price. And at that moment, your size matters.

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   Uncertainty for customers

   Jan 17, 2008 11:22 AM by Daniel Nelson

   As much as this makes sense for Oracle and BEA as companies, this is turbulent news for the administrators and developers of WebLogic. It seemed clear on the call that the main platform Oracle is going to be pushing is Fusion. Where does that leave the thousands of WL customers? Many companies are going to be faced with migration decisions or decisions on how to effectively support a mixed environment of web application servers. There needs to be a way to easily migrate applications from one web application server to others (even if different flavors – WebSphere, BEA, Oracle, JBoss…). My company is taking one approach to help customers with this turbulence. If you want to read more, here's a link to our press release on the matter. http://www.phurnace.com/press/perfectly-timed-with-today-s-bea-acquisition-phurnace-plans-support-for-oracle-oas-to-bea-we.html

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   The soup is getting thicker...

   Jan 18, 2008 1:52 AM by Ovidiu EFTIMIE

   ... and the hungry users won't be able to move their spoon quick enough to pick up only those small interesting things like they're used to. A breakthrough will happen in couple of years when the users will get frustrated by their limited choice.

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   Re: The soup is getting thicker...

   Jan 18, 2008 11:31 AM by Geva Perry

   The breakthrough is already happening. Many developers and companies are moving to the truly open alternative stack of Spring, Hibernate, Tomcat, and run-time engines like GigaSpaces built for scale-out and clouds. See our Open Letter to BEA WebLogic Customers. Geva Perry GigaSpaces

   Reply

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