Why Oracle sweetened its bid for BEA
Larry Ellison bullied and bluffed. But in the end, this software value meal proved too good to pass up.
A little more than a decade ago, fast-food giants realized they could get people to spend more by bundling burgers, fries and a drink together in a value meal.
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| Oracle CEO Larry Ellison finally got BEA — and another big opportunity to upsell corporate customers. Image: Oracle |
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Today’s business software giants are catching on to the same thing. And that, more than anything, explains Oracle’s (ORCL) willingness to pay $8.5 billion for BEA Systems (BEAS) in what would be the third-largest software deal ever.
To understand what BEA brings to the table, let’s take the menu metaphor a little further. Oracle, helmed by deal making CEO Larry Ellison, already sells the industry’s most popular database. And with purchases like PeopleSoft and Siebel, Oracle has been beefing up its selection of applications businesses use to manage employee performance, business expenses, and other functions.
But to entice customers to do all their software shopping with Oracle, Ellison needs to create a full value meal. To achieve that, Oracle needs more of what BEA has.
"For Oracle, this deal is a very big step toward completing our vision of becoming a strategic enterprise software vendor of choice for our customers," Ellison said. "We’ve demonstrated over many acquisitions that we’ve made the past three years how expanding like this benefits both our customers and our shareholders."
The benefit that BEA brings Oracle is middleware. Middleware is the secret sauce that helps the jumble of corporate software programs work together, for example allowing a customer service system to access information from the billing program. In the age of the Internet, that kind of linkage is key as companies seek to build time-saving online experiences for their customers and employees. More
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