Update: Oracle offers $6.7 billion to buy BEA Systems

Oracle announced on Friday that it has offered to buy middleware vendor BEA Systems for $17 per share in cash.

[ Update: BEA calls Oracle's offer too low | Bid turns unfriendly | Analysis: Bidding war coming? | Oracle, BEA product overlaps pondered  | Special Report: Oracle's BEA bid: A big deal ]

Oracle said it had written to BEA's board of directors on Tuesday to make the offer, which represents a premium of 25 percent over BEA's closing share price on Thursday. The Wall Street Journal valued the offer at $6.66 billion.

BEA was a pioneer in the market for Java application server software used to deploy and manage business applications, competing with products like IBM Corp.'s WebSphere. It has been rumored to be an acquisition target on numerous occasions but managed to retain its independence.

"This proposal is the culmination of repeated conversations with BEA's management over the last several years," Oracle President Charles Phillips said in Friday's statement. "We look forward to completing a friendly transaction as soon as possible."

BEA executives were not quoted in the statement, however, and there was no indication early Friday as to whether the company was open to being acquired. That raises the possibility of a lengthy takeover battle like the one Oracle waged to buy PeopleSoft a few years ago.

Oracle said buying BEA would help it to beef up its own middleware suite, an important area for the company that is serving to link several families of business applications that it has acquired. Oracle said it would protect the investments of BEA customers if the deal were to go ahead.

"Our continuing support commitment has been amply demonstrated with all of our previous acquisitions, including PeopleSoft and Siebel. BEA will be no different," Phillips said.

Oracle's Fusion middleware already includes many of the products BEA sells, including an application server, portal server and development tools, meaning the acquisition would create considerable overlap.

Stephen O'Grady, principal analyst with RedMonk, said Oracle's primary motive is likely the expansion and solidification of its presence in the middleware market.

"For all that BEA is not at the heights that it once was, it still owns solid accounts across global enterprises, and while Oracle obviously isn't lacking for presence in those accounts, BEA's middleware is often more highly regarded," O'Grady said.