The IT industry awoke to two major acquisitions Wednesday, one that had been in the works for some time and another that was more of a surprise.
The acquisitions see middleware vendor BEA Systems saying yes to a sweetened offer from Oracle Corp. for US$8.5 billion, and Sun Microsystems agreeing to acquire Swedish open-source database vendor MySQL for US$1 billion. Combined, the two acquisitions will see US$9.5 billion agreed to change hands Wednesday.
The US$8.5 billion purchase of BEA by Oracle, agreed to by BEA’s board, comes just three months after the middleware vendor turned down an earlier offer of US$6.7 billion.
Oracle hopes that acquiring middleware vendor BEA will allow it to improve its own middleware suite, Fusion. That middleware is key to helping customers migrate their systems to a services-oriented architecture (SOA), CEO Larry Ellison said in a conference call last month to discuss the company’s earnings.
With Fusion already able to link to BEA’s WebLogic Java application server, the deal is likely to speed Oracle’s adoption of Java-based middleware, the company said. Oracle’s customers have been telling it for years to buy BEA, it added.
However, the members of BEA’s board were less sold on the idea: They turned down an offer from Oracle of US$17 per BEA share in October, saying it “significantly undervalues BEA.” Oracle in turn dismissed the BEA board’s counter-offer of US$21 per share as “impossibly high.”
But on Wednesday the companies split the difference, and BEA’s board announced it had unanimously approved Oracle’s latest offer of $19.375 in cash per BEA share.
The board accepted only after spending several months looking for other ways to maximize shareholder value, BEA’s chairman and CEO Alfred Chuang said in a statement.
The companies expect to close the deal by mid-year, subject to the approval of regulators and BEA shareholders.
The Sun shines over MySQL
In the days other major IT acquisition, Sun Microsystems announced it will pay US$1 billion for Swedish software company MySQL, whose open-source database is used for some of the most widely visited Web sites in the world.
Sun said the deal will augment its position in the enterprise IT market, including the $15 billion database market.
Sun said MySQL’s product line will help it give further support to the open-source Web application platform known as LAMP, the acronym for the Linux OS, Apache Web server, MySQL database and the PHP/Perl programming languages.
MySQL’s strength in software-as-a-service offerings — where applications are delivered over the Internet through a Web browser — are also a plus, Sun said. Databases are crucial for Internet-based applications in sites offering a range of services, from e-commerce to social networking.
Sun will pay US$800 million in cash and US$200 million in options, and the deal is expected to close by the end of Sun’s 2008 fiscal year, which will end June 30.
Sun’s acquisition ends speculation that MySQL might become a public company.
MySQL has become a formidable competitor to other relational database management systems from companies such as Oracle and IBM. The database itself is free for people to download, and MySQL makes money by offering subscription support packages.
MySQL CEO Marten Mickos — whose business cards list him as “Open Sourcerer”– will join Sun’s executive team. MySQL will be folded into Sun’s Software, Sales and Service organizations. Sun said it plans to create a joint team to integrate MySQL, which has 400 employees in 25 countries, into its operations.
Sun said MySQL will gain new distribution through companies such as Intel, IBM and Dell via existing relationships Sun has with those vendors.
Sun also said it will also work on optimizing the LAMP stack to run on GNU/Linux, Microsoft’s Windows OS and its OpenSolaris OS.
Sun is in need of a database management system, one analyst said. Its choice of MySQL “makes sense with Sun’s open-source orientation,” said James Kobielus, senior analyst with Forrester Research.